The SBA and PROfess

Profess

proh-fes

-to say or declare (something) openly

- to say that you are, do, or feel something when other people doubt what you say -old-fashioned : to believe in (a particular religion)

 

from Latin profess- ‘declared publicly’, from the verb profiteri, from pro- ‘before’ + fateri ‘confess’

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TIP OF THE WEEK

 

Professed SBA 7(a) lenders can also utilize SSBCI guarantees.

 

The U.S. Small Business Administration’s (“SBA”) release of SOP 50 10 7, effective November 15th, clarifies that  when loan proceeds are used for multiple purposes and if 51% or more of the proceeds are used for real estate then the maximum maturity may be up to 25 years.

 

Lenders should note that the new SOP does not allow the 51%  rule to be used when the loan finances a complete partner buyout or a partial change of ownership, regardless of whether the business owns real estate.  This appears to primarily impact an Eligible Passive Company partner buyout, where the real estate is the primary asset, but the 25 year term will not be available for these transactions.  SBA expressly limits the term for partner buyouts to 10 years.

 

There is NO guidance on amortization with a SSBCI guarantee.   Lenders can use any amortization they want.

 

Any SBA 7(a) loan delayed because of an ETRAN error code that cannot be resolved in a timely manner can instead utilize a SSBCI guarantee.

 

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Indices:

PRIME RATE= 8.50%

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SBA 504 Loan Debenture Rate for October

 

For 20 year debentures, the debenture rate is only 5.80% but note rate is 5.879% and the effective yield is 7.276%.

For 25 year debentures, the debenture rate is only 5.82% but note rate is 5.876% and the effective yield is 7.221%.

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AHEAD OF THE YIELD CURVE

 

At their last meeting on monetary policy and interest rates, the Federal Reserve professed that “job gains have moderated since earlier in the year but remain strong.”

 

The post-meeting statement was little changed from the one issued September 20. There were a few tweaks to the language.

 

Job gains are now said to "have moderated since earlier in the year" from "slowed in recent months".

 

What is the difference between moderated and slowed?

 

Two days after the Federal Reserve met, the report on employment for October came out.

 

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

 

October   150,000

September 297,000

August    165,000

July      236,000

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.

 

Some of the softer gain in October can be attributed to a decline of 33,200 in manufacturing of motor vehicles and parts while the UAW strike is active. These jobs will come back once the strike is settled.

 

Payrolls among service-providers rose 110,000 reflecting strong gains among education and health services of 89,000.

 

In October, the year-over-year change was 2.97 million jobs.  Employment was up solidly year-over-year but has slowed to more normal levels of job growth recently.

 

In its statement, the Fed maintained that inflation remains elevated.

 

The long end of the yield curve prognosticates inflationary expectations.

 

At the last auction of 30 year treasury bonds, the high yield was awarded at 4.837 percent, way up from 4.345 percent a month ago and 4.189 percent in August.

 

Keep your eyes and ears open for the next auction of 30 year treasury bonds this Thursday.

 

The 30 year treasury bond is currently at yields not seen since June of 2007.

 

 

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OFF BASE

 

So what is the difference between one who professes and a professor?

 

Literally, professor derives from Latin as a "person who professes".

 

Their job is to profess what they believe after years of study and thought on an issue.