Monday, February 10, 2020

The SBA and PROleptic 


Of a calendar, extrapolated to dates prior to its first adoption Describes an event as having been assigned too early a date Anticipating and answering objections before they have been raised

From Greek prolepsis + ic  (see SBA and PROlepsis June 17, 2019) from prolambanein (to anticipate), from pro- (before) + lambanein (to take).

The promulgation of SOP 50-10-6 has been proleptic.

On Monday, February 10, the SBA is publishing an Interim Final Rule that will become effective in 30 days.

The rules address when the owners of a small business Applicant are required to inject excess liquid assets into the project;

amend certain regulations setting forth the affiliation principles applicable to SBA financial assistance programs;

and limit certain fees payable by loan Applicants to amounts deemed reasonable by SBA;

The big change on affiliation will be if a small business Applicant derived more than 85 percent of its revenue from another business over the previous three fiscal years, SBA would find that the small business Applicant is economically dependent on the other business and, therefore, that the two businesses are affiliated.

Compliance with two of the regulatory changes on fees will not be required until October 1, 2020.


SBA 504 Loan Debenture Rate for January

For 20 year debentures, the debenture rate is only 2.32% but note rate is 2.361% and the effective yield is 3.644%.

For 25 year debentures, the debenture rate is only 2.45% but note rate is 2.48% and the effective yield is 3.714%.

The Federal Reserve proleptically downgraded its assessment of the economy at the last meeting on monetary policy and interest rates.   The wording on inflation was changed, as policy is now consistent with "returning" inflation to the 2 percent target from running "near" the 2 percent target in the prior statement.

The Federal Reserve’s procellous proditomania might be prospicient despite the Labor Department reporting that the US created a robust 225,000 new jobs in January to get off to a good start in 2020.

Employment in manufacturing, however, fell for the third time in the past four months as another 12,000 jobs were lost.

Keep your eyes and ears open for Friday’s report from the Federal Reserve on industrial production and capacity utilization.

Last month capacity utilization fell to 77% in December, the second lowest reading in 27 months.

Here is what capacity utilization has been doing and this week interesting little table of data:

2007- 81.5
2008- 79.9
2009- 66.9
2010- 74.8
2011- 76.7
2012- 79.0
2013- 77.8
2014- 78.8
2015- 76.5
2016- 75.4
2017- 76.2
2018- 78.5
2019- 77%

What does all this mean?

I don’t know.

Last month’s report was not all doom and gloom.  Output at utilities, perhaps reflecting unseasonable weather, fell a sharp 5.6 percent, which offset a small rise for manufacturing.  The modest net gain for manufacturing is a definite positive for the economic outlook. The sector, and its vulnerability to foreign demand, is a chief concern of the Federal Reserve and a major reason behind last year's three consecutive rate cuts.  Fourth quarter GDP was dragged down by a 1.09 point negative contribution from inventories where growth slowed very sharply. Whether businesses begin accelerating their inventory build, amid what is moderate demand, is another question for the ongoing quarter.

The Federal Reserve’s prolegomenon after their last meeting on monetary policy indicated a probative approach as their interest rate projections indicate that rates will stay at current levels this year.

The proleptic Gregorian calendar is produced by extending the Gregorian calendar backward to dates preceding its official introduction in 1582.  The Gregorian calendar, named after Pope Gregory XIII, shortened the average year by 0.0075 days to stop the drift of the calendar with respect to the equinoxes.  That way spring would remain around March 21.  The calendar further adjusts by adding a leap year, meaning we have 29 days for February this year.

Great Britain and its possessions did not adopt the Gregorian calendar until 1752.  George Washington was originally born on February 11, 1731.    After the switch, that day became February 22, 1732, which is the date commonly given as Washington's birthday.

This year we celebrate Washington’s Birthday on February 17th to comply with the Uniform Monday Holiday Act enacted in 1968.

The point is that a three day weekend is coming!