The SBA and PROperate

properate

pro per ate

speed up

quicken

hasten

From Latin properatus, past participle of properare, from properus speedy

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TIP OF THE WEEK

 

Have you wished something would just hurry up and be done with?    That’s properation.

 

Effective June 1st is the new SOP 50-10-8.

 

It is a return to time-tested, prudent lending policies SBA Lenders should be familiar with.

 

The differences between SBA and SSBCI guarantees are unique.

 

It would be proficuous to know the distinctions.

 

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Indices:

PRIME RATE= 7.50%

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SBA 504 Loan Debenture Rate for May

 

For 20 year debentures, the debenture rate is only 5.07% but note rate is 5.14339% and the effective yield is 6.416%.

For 25 year debentures, the debenture rate is only 5.14% but note rate is 5.17343% and the effective yield is 6.397%.

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AHEAD OF THE YIELD CURVE

 

The Federal Reserve will not be properating any cuts to interest rates.

 

The Fed Open Market Committee left the fed funds target rate range at 4.25 to 4.50 percent at the end of the May 6-7 meeting.

 

It’s statement on monetary policy said it “judges that the risks of higher unemployment and higher inflation have risen.”

 

I walked into Home Depot to see where the price of 2 x 4s are.

 

Douglas Fir 8 foot 2 x 4s are always at the front by the door at every store in America.

 

This is the most widely used wood in the country.    It was what was used for all the railroad ties and telegraph poles when the west was being settled.

 

Every new home and existing home project uses this 2x4.

 

As far as I could recall, the price of that 2x4 was consistently under $3.

 

Now every time I go into Home Depot, I check the price of this 8 foot 2x4.

 

Here is the price of the Douglas Fir 8 foot 2x4 over the last couple of years:

 

5/15/2025              $3.83

5/15/2024            $3.63

10/31/2023         $3.07

7/22/2023            $3.63

7/16/2023            $3.63

5/6/2023              $3.34

4/1/2023              $2.98

2/18/2023            $2.98

2/12/2023            $2.98

9/24/2022            $3.97

8/12/2022            $4.65

6/4/2022              $5.92

5/22/2022            $6.64

 

What does this mean?

 

The price of soft lumber is up just over 5 ½ % from a year ago.

 

Can’t really blame tariffs for that.

 

Canadian lumber accounts for roughly 30% of the U.S. softwood lumber supply, making tariffs a significant factor for downstream industries like homebuilding and manufacturing.

 

As of today, Canadian softwood lumber entering the United States is subject to a combined 14.54% tariff rate.

 

On April 2 Canadian softwood lumber was exempted from the new 25% reciprocal or baseline tariffs applied to other Canadian goods.

 

This exemption was a critical win for the forest value chain, maintaining the status quo at 14.54% and avoiding a cost spike that could have disrupted markets.

 

While the price of lumber may not be jumping, long term interest rates are.

 

At the most recent auction of 30 year Treasury bonds, the high yield was awarded at 4.819 percent versus 4.813 percent a month ago and 4.623 percent two months ago.

 

The offering amount at $25 billion is up from $22 billion last month.

 

Increases in the amounts auctioned impacts rates from the supply and demand side.

 

The U.S. Treasury Department has sharply increased its borrowing estimate for the current quarter, projecting $514 billion in net marketable debt from April through June. That marks a stunning 317% jump from its earlier forecast of $123 billion, made just two months ago.

 

The big shift is largely due to the government starting the quarter with far less cash on hand than expected.

 

Treasury expected to have $850 billion in its coffers by the end of March. Instead, the balance was just $406 billion.

 

The lower balance is mostly the result of Congress still not raising the federal debt ceiling, which limits the government's ability to issue new debt.

 

Congressional properation and procrastination will prognosticate longer term interest rates.

 

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OFF BASE

 

The week will properate.

 

A three day weekend approaches.

 

The Federal Reserve has proscribed banks from being open on the following days:

 

Monday, May 26: Memorial Day

Thursday, June 19: Juneteenth

Friday, July 4: Fourth of July

Monday, Sept. 1: Labor Day

Monday, Oct. 13: Columbus Day

Thursday, Nov. 27: Thanksgiving

Thursday, Dec. 25: Christmas