The SBA and PROpitious

 propitious

pruh-PISH-us

favorably disposed : benevolent

being a good omen : auspicious

tending to favor : advantageous

from the Latin word propitius, is a synonym of favorable and auspicious. All three essentially mean "pointing toward a happy outcome,"

Propitious may also apply to beginnings, but it often suggests a continuing promising condition

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TIP OF THE WEEK

The recently approved Continuing Resolution (CR) to extend current government funding levels through December 11 is propitious for SBA 7(a) loans.

This CR includes $15 million in appropriations to support $30 billion of authorization for the 7(a) program for FY2021 which should be sufficient for 7(a) volume without concern for insufficient funding or authorization.

Proliferating promulgations to PPP, Section 1112 payment extensions, and 7(a) enhancement provisions procrastinate as we approach the general election.

On October 2nd, SBA issued Notice 5000-20057, Paycheck Protection Program Loans and Changes of Ownership.  This notice provides guidance for “changes of ownership” in situations where the borrower has a PPP loan.

The notice makes clear that even after any change of ownership, the PPP borrower remains fully responsible for ALL requirements related to the PPP loan.  An escrow account controlled by the PPP Lender with funds equal to the outstanding balance of the PPP loan prohibits profligacy.

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Indices:

PRIME RATE= 3.25%

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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%.

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AHEAD OF THE YIELD CURVE

 

It is a propitious time for prospicient borrowers.

The probative on interest rates will be apparent with this Wednesday’s  prolegomenon from the Federal Reserve’s last meeting on monetary policy.  Procellous proditmania proliferates across the yield curve.

Also keep your eyes and ears open for this week’s auction of 30 year Treasury bonds.  At last month’s auction, results were solid with the high yield of only 1.473 percent.   The average high yield over the last year was ½ percent higher.

So what’s the prognosis on interest rates?

Eurodollar futures settle at a three- month lending rate that has averaged about 22 basis points more than the Fed's target over the past 10 years.

Here is a summary of what the market expects for Eurodollar futures based upon the pit-traded prices at the Chicago Mercantile Exchange:

DEC20-0.25

DEC21- 0.22

DEC22- 0.28

DEC23- 0.42

DEC24- 0.62

DEC25- 0.83

 

What does all this mean?

I don’t know.

The Federal Reserve has been very protean.

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OFF BASE

 

With everything going on, take a break next Monday.

 

The Federal Reserve has promulgated that these are our remaining holidays for 2020:

Columbus Day October 12

Veterans Day November 11

Thanksgiving Day November 26

Christmas Day December 25

 

We can’t quite yet prorogue 2020.