The SBA and PROvoke

 Provoke

prəˈvoʊk

to call forth (a feeling, an action, etc.) to stir up purposely to provide the needed stimulus for

from Latin provocare ‘challenge’, from pro- ‘forth’ + vocare ‘to call’.

_____________________________________________

TIP OF THE WEEK

 

This might provoke SBA lenders and borrowers

 

Effective October 1st, the guarantee fee for SBA 7(a) loans are:

-loans of $500,000 or less: 0.00%:

-loans of $500,001 to $700,000: 0.55% of the guaranteed portion.

-loans of $700,001 to $1,000,000: 1.05% of the guaranteed portion.

-loans $1,000,001 to $5,000,000: 3.5% of the guaranteed portion up to $1,000,000, plus 3.75% of the guaranteed portion over $1,000,000.

 

_________________________________________

 

Indices:

PRIME RATE= 5.50%

________________________________________

SBA 504 Loan Debenture Rate for September

 

For 20 year debentures, the debenture rate is only 4.10% but note rate is 4.16% and the effective yield is 5.343%.

For 25 year debentures, the debenture rate is only 4.26% but note rate is 4.30% and the effective yield is 5.44%.

_______________________________________________

AHEAD OF THE YIELD CURVE

 

Will the Federal Reserve provoke protervity?

 

The procacity over the Federal Open Market Committee meeting this week is profligate proditomania.

 

It is all but certain that the fed funds rate will be increased.   The only question is by how much.

 

That will depend on where they think we are at with inflation.

 

Last week it was widely reported that the consumer price index was up over 8% from a year ago.

 

Of course it is up because prices had dropped during the depths of the  procellous pandemic.

 

Keep in mind that the CPI is based on prices of food, clothing, shelter, fuels, transportation, doctors’ and dentists’ services, drugs, and other goods and services that people buy for day-to-day living.

The index measures price change from a designed reference date. The reference base is 1982-84 and equals 100.

 

Here is what the index has done over the last year:

2021-08-01          273.092

2021-09-01          274.214

2021-10-01          276.590

2021-11-01          278.524

2021-12-01          280.126

2022-01-01          281.933

2022-02-01          284.182

2022-03-01          287.708

2022-04-01          288.663

2022-05-01          291.474

2022-06-01          295.328

2022-07-01          295.271

2022-08-01          295.620

 

It appears that price increases have gone procumbent over the last three months.

 

One of the Federal Reserve’s preferred measures of inflation is the capacity utilization rate.

 

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- 79.7

2020- 74.5

2021- 76.4

2022- 80.0

 

What does all this mean?

 

I don’t know.

 

Normally the Fed is concerned about inflationary pressures when the capacity utilization rate is about 82%.

 

Capacity utilization declined 0.2 percentage point in August to 80.0 percent.

 

The overall reading was pulled down by a decline in utilities output.

 

Utilities capacity usage fell to 72.8 percent in August from 74.7 percent in July.    Capacity use for manufacturing was unchanged.

 

Cooler weather in August relative to July eased demand for utilities and electricity for air conditioning. Electricity output fell 2.9 percent

 

At last week’s auction of 30 year Treasury bonds, the high yield was awarded at 3.511 percent, up from 3.106 percent at last month’s auction.

 

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 plus years.

 

The December 2022 implied rate is now at 4.454% up from 3.96% just last month and up from only 0.17% in October.

 

 

__________________________________________

 

OFF BASE

 

The fall equinox arrives on Thursday, September 22, 2022.

 

The word “equinox” comes from Latin aequus, meaning “equal,” and nox, ”night.” On the equinox, day and night are roughly equal in length.

 

After the autumnal equinox, days become shorter than nights as the Sun continues to rise later and nightfall arrives earlier. This ends with the winter solstice, after which days start to grow longer once again.