The SBA and PROsaic

 prosaic

pro-ZAY-ik

1. Dull; unimaginative.

2. Everyday; straightforward; ordinary.

3. Having the character of prose as compared to the feeling of poetry.

 From Latin prosa (prose), from prosa oratio (straightforward speech), from provertere (to turn forward).

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TIP OF THE WEEK

 The prosaic proliferating promulgations in the new SOP 50-10-6 (SOP is an acronym for Standard Operating Procedures) has a credit elsewhere test.

 Although a personal resources test was rescinded by CARES Act as of March 27, 2020, lenders are still required to determine that some or all of the loan is not available from the liquidity of the applicant or its owners.

 Lenders may want to use the rescinded personal resources test as a means of determining availability of liquidity.

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 Indices:

PRIME RATE= 3.25%

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SBA 504 Loan Debenture Rate for November For 20 year debentures, the debenture rate is only 1.05% but note rate is 1.07% and the effective yield is 2.364%.

For 25 year debentures, the debenture rate is only 1.14% but note rate is 1.15% and the effective yield is 2.399%.

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AHEAD OF THE YIELD CURVE

 

A protean Federal Reserve released a prosaic statement on monetary policy virtually repeating the text of its September statement.

 Reflecting a procellous prolepsis they said that economic activity and employment "continued to recover", which is less upbeat perhaps versus "have picked up" in their September statement.

 Keep your eyes and ears open for this week’s auction of 30 year Treasury bonds.  At last month’s auction, results were soft with the high yield at 1.578%.

 Here is what the 30 year Treasury bond has been doing and this week’s interesting little table:

2006- 4.91

2007- 4.84

2008- 4.18

2009- 3.89

2010- 4.61

2011- 2.89

2012- 2.77

2013- 3.25

2014- 3.97

2015- 2.91

2016- 2.32

2017- 3.16

2018- 3.13

2019- 2.594

2020- 1.216

 

What does all this mean?

 

I don’t know.

 The recent rise in yields has prevented indigestion associated with new issuance, but investors say Treasuries may need to cheapen further to whet the appetite of bond buyers ahead of rising federal budget deficits.

 The auction amount has increased over 30% to $27 billion due to higher borrowing needs.  Last month’s auction was $23 billion.

 It is a propitious time for prospicient borrowers.

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OFF BASE

 Author F. Scott Fitzgerald was never prosaic.   One of his quotes is perhaps appropriate for these times:

 “The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.”

 If you are having trouble functioning right now, go ahead and take Wednesday off.  It’s a holiday.

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

Veterans Day November 11

Thanksgiving Day November 26

Christmas Day December 25

 We can’t quite yet prorogue 2020.