The SBA and PROtocol

protocol

pro·to·col -ˌkōl,

 

the customs and regulations dealing with diplomatic formality, precedence, and etiquette.

 

an original draft, minute, or record from which a document, especially a treaty, is prepared.

 

from Medieval Latin prōtocollum, from Late Greek prōtókollon originally, “a leaf or tag attached to a rolled papyrus manuscript and containing notes as to contents

 

 

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TIP OF THE WEEK

 

SBA has broken protocol by correcting and clarifying a new version of its Standard Operating Procedure before it goes into effect.

 

SBA SOP 50-10-7 will be effective August 1st, 2023.

 

A technical update to SOP 50-10-7 is being released clarifying some issues that arose in the initial version of the SOP.

 

SBA is indicating that any seller carry utilized as a portion of an equity injection in a business acquisition can not have a balloon payment.

 

In the case of a partial purchase of a business, any remaining seller that had at least a 20% ownership interest PRIOR to the transaction must personally guarantee the loan.

 

The guidance for SSBCI guarantees has also changed providing more flexibility with debt refinance.

 

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Indices:

PRIME RATE= 8.25%

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SBA 504 Loan Debenture Rate for July

 

For 20 year debentures, the debenture rate is only 5.16% but note rate is 5.23% and the effective yield is 6.637%.

For 25 year debentures, the debenture rate is only 5.18% but note rate is 5.23% and the effective yield is 6.583%.

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AHEAD OF THE YIELD CURVE

 

What’s the protocol for the Federal Reserve?

 

Employment rose by another 209,000 in June.   Or did it?

 

Employment for April was revised down by 77,000, from +294,000 to +217,000.

 

Originally, employment in April was estimated at 253,000 new jobs.

 

A month later, April was revised up by 41,000, from +253,000 to +294,000.

 

Now, its been knocked down to 217,000 new jobs.

 

The change for May was revised down by 33,000, from +339,000 to +306,000.

 

With these revisions, employment in April and May combined is 110,000 lower than previously reported.

 

Here are the latest jobs numbers from the Bureau of Labor Statistics.

 

June      209,000

May       306,000

April       217,000

March   217,000

February  311,000

January  504,000

2022      4,810,000

2021       7,270,000

2020    -9,370,000

2019     2,108,000

2018      2,679,000

2017      2,110,000

2016      2,160,000

2015     2,740,000

2014     3,116,000

2013     2,074,000

2012     2,193,000

2011     2,103,000

2010    1,022,000

2009    -5,052,000

2008    -3,617,000

2007    1,115,000

2006    2,071,000

2005    2,484,000

2004    2,019,000

 

What does all this mean?

 

I don't know.

 

One profligate propaedeutic has been that there is a trade-off between jobs and inflation.

 

The Fed likes to gauge inflationary pressure by looking at capacity utilization rates.

 

Normally the Fed does not feel there are inflationary pressures until the capacity utilization rate is about 82%.

 

Last month capacity utilization moved down to 79.6 percent in May.

 

The decline in however may not be because manufacturing and utility production has slowed.    Instead capacity has grown.

 

One of the bright spots in the economy right now is investment in plants and fixed assets.

 

Manufacturing capacity expanded about 3/4 percent in 2022 and is expected to grow by 1-1/4 percent in 2023.

 

Since capacity utilization rates measures output as a percentage of capacity, if capacity grows faster than output, the capacity utilization rate would decline.

 

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

 

The Federal Reserve meets on monetary policy next week.

  

 

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OFF BASE

 

Protocol ultimately comes from Late Greek prōtókollon, a compound noun meaning “the first kóllēma (sheet) on a papyrus roll,”

 

It was formed from prōto-, a combining form of prôtos “first” and the noun kóllēma “something bound or glued together”.

 

The plural kollēmata means “sheets of papyrus glued together to form a roll,”.

 

These rolls were usually 20 sheets, averaging 20–26 feet in length.

 

In Medieval Latin prōtocollum acquired the meaning “draft (of a document), minutes (of a meeting), public register, a document bearing an official seal.”

 

In the 19th century, it began to be used in reference to the etiquette observed by the Head of State of France in ceremonies and relations with other dignitaries and the accepted and customary codes of behavior in polite society.

 

In late 19th-century Russia, protocol ( protokól ) meant “an official police record of a case or incident,” its meaning in the infamous “Protocols [ protokóly ] of the Elders of Zion,” first published in Russia in 1903.

 

It has since extended in meaning to cover any code of proper conduct.