The SBA and PROwess

 prowess

PROU-is

Superior skill, ability, strength, etc.

From Middle French prou (valiant), from Old English prud. Earliest documented use: 1300.

_____________________________________________

TIP OF THE WEEK

Proliferating prodigious promulgations can prompt SBA lending prowess to be profligate.

The new version of the SBA Standard Operating Procedures SOP 50-10-6 will be effective October 1st.

A change of ownership is now a new authorized purpose for International Trade Loans.  That means possibly a business acquisition loan could have a 90% guaranty from the SBA.

The SBA Office of International Trade has indicated that to qualify the BUYER must meet International Trade eligibility.   Being adversely impacted by import competition cannot be used as a basis for eligibility with an International Trade Loan for change of ownership.   A change of ownership between existing owners of the Applicant is also NOT eligible as an International Trade Loan.

Hotels and motels, NAICS Industry Subsector Code 721 (Accommodation), are also NO LONGER eligible as an International Trade Loan.

The point here is to not be too fancy with this new provision.  As John Wooden once proclaimed “If you keep too busy learning the tricks of the trade, you may never learn the trade.”

__________________________________________

 Indices:

PRIME RATE= 3.25%

________________________________________

SBA 504 Loan Debenture Rate for September For 20 year debentures, the debenture rate is only 1.05% but note rate is 1.07% and the effective yield is 2.366%.

For 25 year debentures, the debenture rate is only 1.15% but note rate is 1.167% and the effective yield is 2.410%.

_______________________________________________

AHEAD OF THE YIELD CURVE

 

Don’t mistake activity for achievement.  That’s another John Wooden pronouncement.

Last month’s apparent increase in jobs may be like Sisyphus rolling his rock up the hill only for it to roll back down when it nears the top.

About ¼ of the monthly gain in total payrolls was the hiring of temporary 2020 Census workers.  In August, the year-over-year change was negative 10.25 million jobs.

Breaking down payroll gains, manufacturing added only 29,000 jobs in August.

Keep your eyes and ears open for this week’s report on Industrial Production and Capacity Utilization from the Federal Reserve.

Here is what capacity utilization has been doing and this week’s 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

2020- 72.7

 

What does all this mean?

 

I don’t know.

 

Last month capacity utilization rose 2.1 percentage points to 70.6%.  This is 9.2 percentage points below the long run average.   Back in April it was at an all-time low of 64.9 percent.

 

American manufacturing prowess had gone procumbent over a year ago.  It was already declining in 2019 as reflected in the drop in capacity utilization in the above chart.

 

It marked the worst year for manufacturing since 2015 as the trade war and lackluster global growth hurt America’s industrial economy.

 

Procellous proditmania proliferates but the past is indeed prologue.

 

__________________________________________

OFF BASE

 

Those John Wooden quotes were inspired by my recent reading of his “They Call Me Coach”.

 

His basketball coaching prowess may be overshadowed by some of his aphorisms such as:

 

Things turn out best for the people who make the best of the way things turn out.

 

Do not let what you cannot do interfere with what you can do.

 

It's what you learn after you know it all that counts.

 

Ability may get you to the top, but it takes character to keep you there.

 

If you’re true to yourself, you’re going to be true to everyone else.

 

That last one truly defines probity.