The SBA and laodicean

laodicean

(lay-ah-duh-SEE-uhn)

Lukewarm or indifferent

After Laodicea, a city in Asia Minor, whose Christians were rebuked for their indifference to religion in Revelation 3:16 in the New Testament.
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TIP OF THE WEEK

Borrowers and lenders are not being laodicean about the SBA 7(a) loan program. Loan volume has more than doubled, almost tripled from three years ago. Over $15,847,220,000 in SBA 7(a) loans have already been approved out of an authorized total of $17,500,000,000 for SBA’s fiscal year which doesn’t end until September 30th.

SBA 7(a) loan proceeds can be used for real estate purchase, real estate debt refinance, working capital, business debt refinance, equipment purchase, and business acquisitions.

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Indices:

PRIME RATE= 3.25%
SBA LIBOR Base Rate July 2011 = 3.19%
SBA Fixed Base Rate July 2011 = 5.66%
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504 Debenture Rate for July

The debenture rate is 3.74% but note rate is 3.79% and effective yield is only 5.59%.

Note that the effective yield for debt refinance under the 504 program is slightly higher.

It is now 5.947%.
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AHEAD OF THE YIELD CURVE

Is the bond market being laodicean about the debt ceiling?

Last week, the government’s $13 billion sale of 30 year bonds attracted higher-than average-demand. Investors downplayed concerns that the country faces the unprecedented situation in 15 days of the government not having enough money to pay all its bills. The government has said it has until August 2nd before its ability to make payment on $14.3 trillion of debt expires.

Demand for bonds is measured by two things: the bid to cover ratio and its yield.

The bid-to-cover ratio on the $13 billion in bonds, which gauges demand by comparing total bids with the amount offered, was 2.80, versus a 2.64 average at the past 10 sales.

The 30 year bond yielded 4.198 percent at the auction. Last month the yield at auction was 4.238 percent. It was up to 4.79 percent back in February. This morning it’s up to 4.25 percent.

Here is what the 30 year bond has been doing:

2001- 5.49
2002- 5.43
2003- ND
2004- ND
2005- ND
2006- 4.91
2007- 4.84
2008- 4.18
2009- 3.89
2010- 4.61

What does all this mean?

I don’t know.

The slope of the yield curve—the difference between the yields on short- and long-term maturity bonds—has achieved some notoriety as a simple forecaster of economic growth. The rule of thumb is that an inverted yield curve (short rates above long rates) indicates a recession in about a year, and yield curve inversions have foreshadowed each of the last seven recessions. One of the recessions predicted by the yield curve was the most recent one. The yield curve inverted in August 2006, a bit more than a year before the current recession started in December 2007.

Over the past month, the yield curve became flatter, as longer term rates have dropped. .

So while the yield curve has become flatter, it has not inverted.

The bond market is obviously discounting concerns about the debt ceiling debate.

The bond market is saying based upon past values of the yield curve spread and GDP growth that the economy will continue to grow albeit at a lackluster, laodicean pace.

The Federal Reserve Open Market Committee does not meet again until August 9th.

Interest rates will continue to remain low for an extended period.
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OFF BASE

Perhaps most laodicean of all was Nero.

On this day in history in AD 64, Nero supposedly played the fiddle (violin) while Rome burned.

There is a major flaw with this story. There was no such instrument as the fiddle (violin) in first century Rome. There's no definitive date for the invention of the violin, or of its synonym as fiddle, but it certainly wasn't until at least the 16th century.

The point is however we should NOT To occupy ourselves with unimportant matters and neglect priorities during a crisis.

So sign that on-line petition to try and get Fox Sports to bring back Vin Scully for one last World Series.

Vin has not announced a World Series game on television since 1988 when the Dodgers last went to the fall classic.

Go here if you’d like to have Vin Scully announce the World Series one last time:

http://www.petitiononline.com/ScullyWS/petition.html

504 debenture rate

SBA 504 debenture rate for July

The debenture rate is 3.74%, the note rate is 3.79% and the effective yield is 5.59%.

Note that the effective yield for debt refinance under the 504 program is slightly higher.  It is now 5.947%.

SBA 7(a) Weekly Lending Update

SBA 7(a) loan approvals enjoyed the Fourth of July holiday along with everyone else as loan approvals for the short week totaled only $200,373,000.  That's down from $353,642,000 from the week before.

So far $15,847,220,000 in SBA 7(a) loans have been approved.  This is a dramatic increase over the last two years and is a testament as to the SBA 7(a) loan program being a viable source of financing for small businesses.

SBA 7(a) Rate Update

Indices:

PRIME RATE= 3.25%
SBA LIBOR Base Rate July 2011 = 3.19%
SBA Fixed Base Rate July 2011 = 5.66%

Lenders can charge up to 2.75% over these indices

SBA 7(a) Weekly Lending Update

SBA loan approvals jumped up last week to $329,597,000.

That brings the year to date total to $15,293,205,000. 

There are 14 weeks left in the government's fiscal year and the authorized limit for the 7(a) program is $17,500,000,000.

The SBA and contumacious

contumacious

(KON-tuh-may-shuhs)

Stubborn, insubordinate.

From Latin contumacia, from contumax, contumac- (insolent).
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TIP OF THE WEEK

The contumacious recovery in the economy prompted the Federal Reserve last week to reiterate that interest rates will remain low for an “extended period.”

SBA 7(a) loans for real estate purchase, real estate debt refinance, business debt refinance, business acquisition, equipment purchase and working capital provide attractive rates that will persist for some time.

The 504 debenture rate is also attractive for real estate purchase and real estate debt refinance.

For every $1,000,000 dollars borrowed to purchase or refinance real estate, the monthly payment is around $6,000.
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Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate June 2011 = 3.19%
SBA Fixed Base Rate June 2011 = 5.73%
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504 Debenture Rate for June
The debenture rate is 3.675% but note rate is 3.729% and effective yield is only 5.521%.
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AHEAD OF THE YIELD CURVE

The Federal Reserve Open Market Committee met last week for two days.

When they were done meeting they said that “economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate for an extended period.”

So how long is an extended period? The Fed has kept its target rate locked at zero to 0.25 percent since December 2008.

The futures market gives us a hint that an extended period looks to be a few more years.

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 years. Here is a summary of what the market expects for Eurodollar futures based upon the pit-traded prices at the Chicago Mercantile Exchange:

DEC11- 0.52
DEC12- 0.91
DEC13- 1.73
DEC14- 2.71
DEC15- 3.59
DEC16- 4.23
DEC17- 4.61
DEC18- 4.77

What does all this mean?

I don’t know.

It would appear that the savings from lower variable rates of interest should persist.
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OFF BASE

The contumacious owner of the Los Angeles Dodgers forced the team into bankruptcy this morning.

Their only real asset is announcer Vin Scully, who has been painting pictures with his words since 1950 when he joined the Dodgers.

Unfortunately Vin has not announced a World Series game on television since 1988 when the Dodgers last went to the fall classic.

There is now an on-line petition to try and get Fox Sports to bring back Vin Scully for one last World Series.

Go here if you’d like to have Vin Scully announce the World Series one last time:
http://www.petitiononline.com/ScullyWS/petition.html

SBA 7(a) Weekly Lending Update

$265,643,000 in SBA 7(a) loans were approved last week.

That brings the year to date total to $14,963,608,000. 

SBA 7(a) loans can be used for real estate purchase or refinance, business debt refinance, equipment purchase, business acquisitions and working capital.

504 debt refinance

SBA just released a further set of enhancements to the regulations governing the Temporary 504 Refinance Program. 
In short, the further enhancements allow:
- Submission of an application subject to an appraisal
- A clarification on the handling of multiple note refinancings

Anyone who owns their own building and has a balloon coming due should seriously consider a refinance with a 504 loan.

504 debenture rate

SBA 504 debenture rate for June


The debenture rate is 3.675%, the note rate is 3.729% and the effective yield is 5.521%.

SBA 7(a) Weekly Lending Update

SBA 7(a) loan approvals jumped up last week to $290,785,000.

That brings the year to date total to $14,697,965,000.

More and more borrowers and lenders are turning to the SBA 7(a) loan program to refinance debt, fund working capital, buy equipment, acquire businesses and buy real estate.

The SBA and epiphenomenon

epiphenomenon

(ep-i-fuh-NOM-uh-non, nuhn)

A secondary phenomenon, one resulting from another. 2. An additional symptom appearing during the course of an illness, but not necessarily related to it.

From Greek epi- (upon, after, over) + phainomenon (that which appears), from phainesthai (to appear).
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TIP OF THE WEEK

Tantalizingly low interest rates are one epiphenomenon of this economy. And it looks like rates will remain low for quite a while.

For every $1,000,000 dollars borrowed to purchase or refinance real estate, the monthly payment is around $6,000.
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Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate June 2011 = 3.19%
SBA Fixed Base Rate June 2011 = 5.73%
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504 Debenture Rate for May

The debenture rate is 3.79% but note rate is 3.85% and effective yield is only 5.639%.
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AHEAD OF THE YIELD CURVE
So are we headed for a double dip recession?

The economy has visibly slowed as only 54,000 jobs were created last month compared to 232,000 in April.

The yield curve is telling us no. We are not headed for a double dip recession.

The slope of the yield curve—the difference between the yields on short- and long-term maturity bonds—has achieved some notoriety as a simple forecaster of economic growth. The rule of thumb is that an inverted yield curve (short rates above long rates) indicates a recession in about a year, and yield curve inversions have foreshadowed each of the last seven recessions. One of the recessions predicted by the yield curve was the most recent one. The yield curve inverted in August 2006, a bit more than a year before the current recession started in December 2007.

Over the past month, the yield curve became flatter, as longer term rates have dropped.

Last week’s $13 billion auction of 30 year Treasury bonds drew a yield of 4.238 percent. It was up to 4.79 percent at the February auction.

So while the yield curve has become flatter, it has not inverted.
Here is what the 30 year bond has been doing:

2001- 5.49
2002- 5.43
2003- ND
2004- ND
2005- ND
2006- 4.91
2007- 4.84
2008- 4.18
2009- 3.89
2010- 4.61

What a minute, why no numbers for 2003, 2004, and 2005?

One month after the 9/11 attacks, the Treasury 30 year bond is discontinued. When the Treasury mothballed the 30-year bond in 2001, experts speculated it was trying to drive down long-term interest rates, which had remained stubbornly high while the Federal Reserve was slashing short-term interest rates to revive the economy. When the Treasury discontinued the 30-year bond in 2001, its yield fell 35 basis points in one day. Why? A shrinking supply of the 30-year Treasury bond caused increased demand to drive rates down.

What does all this mean?

I don’t know.

Fed policy makers are due to meet in Washington on June 21-22. Futures contracts showed the likelihood of an increase in the Fed funds target by the March 2012 meeting fell to 21 percent. The Fed’s target rate for overnight lending between banks has stayed at zero to 0.25 percent since December 2008.

One of the reasons the Fed is keeping rates low is because of “low rates of resource utilization.”

Keep your eyes and ears open for Wednesday’s release on capacity utilization. This is one of the Federal Reserve’s favorite measures of inflationary expectations.

Last month capacity utilization, which measures the amount of a factories and plants in use, fell to 76.9 percent last month from 77 percent in March. The capacity utilization rate had been steadily climbing since reaching a historic low in August of 2009 of only 68.2%. The Federal Reserve watches capacity utilization rates to see if production constraints are threatening to cause inflationary pressures. Bottlenecks or shortages often lead to inflationary pressures that would drive prices even higher. Several analysts have pointed to a rate between 81% and 82% as a tipping point over which inflation is spurred.

The Ceridian-UCLA Pulse of Commerce Index tends to lead industrial production which in turn dictates capacity utilization rates. This index is based on real-time diesel fuel consumption data for over the road trucking and serves as an indicator of the state and possible future direction of the U.S. economy. By tracking the volume and location of fuel being purchased, the index closely monitors the over the road movement of raw materials, goods-in-process and finished goods to U.S. factories, retailers and consumers. The Ceridian-UCLA Pulse of Commerce Index™ (PCI), issued last week by the UCLA Anderson School of Management and Ceridian Corporation fell 0.9 percent on a seasonally and workday adjusted basis in May, after falling 0.5 percent in April.

It looks like interest rates should remain low for, as the Federal Reserve likes to say, an “extended period.”

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OFF BASE

Today marks the last day Babe Ruth ever wore a Yankees uniform. In 1948 an ailing Babe Ruth made his final appearance at Yankee Stadium. With the crowd of 49,641 singing Auld Lang Syne, and members of the 1923 Yankees team (the first to play in the stadium) looking on, the New York Yankees retired Ruth's uniform number 3 during ceremonies that also commemorate the 25th anniversary of the Stadium. Fewer than two months later, the 53-year-old Ruth would die from throat cancer.

Tonight Reno Aces pitcher Armando Galarraga faces the Tucson Padres. The last time Armando pitched for the Aces he gave up 10 runs in only four innings. 5 of those runs came on two homers. It certainly has been an interesting year for the former Detroit Tigers pitcher. It was almost exactly a year ago that he pitched the near perfect game while on the Tigers. A wrong call made by the umpire in the top of the ninth with two outs gave him the imperfect game instead.

The Sky Isn't Falling After All

Here is some good news to counter all recent gloomy economic news.

When reporting SBA 7(a) loan volume, the SBA gives us GROSS loan approvals, before cancellations. Taking into account cancellations, net approvals are only about $13.3 billion, and at the current pace SBA should not run out of loan authority for the 7(a) program.

SBA 7(a) Weekly Lending Update

Will the SBA 7(a) program run out of money before its fiscal year ends on September 30th?

So far SBA has approved $14,407,180,000 in SBA 7(a) loans.  That leaves only $3,092,820,000 left for the next 16 weeks. 

In the last two weeks, SBA has approved $462,855,000 in SBA 7(a) loans.   

7(a) Rate Update

Indices:

PRIME RATE= 3.25%
SBA LIBOR Base Rate June 2011 = 3.19%
SBA Fixed Base Rate May 2011 = 5.73%

Lenders can charge up to 2.75% over these indices

The SBA and obdurate

obdurate
(OB-doo-rit)
1. Stubborn: not easily moved.
2. Hard-hearted: resistant to emotions.
From Latin obdurare (to harden), from durus (hard).
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TIP OF THE WEEK

Don't go thinking the recovery in commercial real estate is being obdurate.

Last week the Moody’s/REAL Commercial Property Price Index dropped 4.2 percent from February and is now 47 percent below the peak of October 2007. The national index has fallen for four straight months as sales of distressed properties hurt real estate values.

The national index however hides what’s happening in some markets. According to Moody’s the property type with the largest increase in prices in the West was industrial, where prices rose 4.7% in the past quarter. Western industrial prices are only 7.3% below the peak which occurred in the fourth quarter of 2007.

Many industrial properties are owner-user making them perfect candidates for SBA financing.

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Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate May 2011 = 3.21%
SBA Fixed Base Rate May 2011 = 5.96%
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504 Debenture Rate for May
The debenture rate is 3.79% but note rate is 3.85% and effective yield is only 5.639%.
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AHEAD OF THE YIELD CURVE

Job creation is the obdurate obstacle to economic recovery.

Keep your eye on Friday’s payroll report from the Department of Labor.

Here is a summary of net monthly payroll employment and this week’s interesting little table of data:

April 244,000
March 221,000
February 235,000
January 68,000

2010
December 121,000
November 93,000
October 210,000
September (41,000)
August (1,000)
July (66,000)
June (175,000)
May 431,000
April 218,000
March 230,000
February (36,000)
January (26,000)

2009
December (150,000)
November (11,000)
October (111,000)
September (215,000)
August (201,000)
July (304,000)
June (443,000)
May (322,000)
April (504,000)
March (699,000)
February (651,000)
January (655,000)

2008
December (681,000)
November (597,000)
October (423,000)
September (403,000)
August (127,000)
July (67,000)
June (100,000)
May (47,000)
April (67,000)
March (88,000)
February- (83,000)
January- (76,000)


What does all this mean?

I don’t know.

So far the economy has added 854,000 private sector jobs this year, or 213,500 per month.

This is a much better pace of payroll job creation than last year, but the economy still has 6.955 million fewer payroll jobs than at the beginning of the 2007 recession. At this pace, it will take 3 years just to get back to the pre-recession level, or sometime in 2014!

That means interest rates, especially variable rates, will remain low for awhile.

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OFF BASE



Many people think today marks the beginning of summer but we’ve actually got 22 more days until the first day of summer.

For many baseball teams however, their summer is already over.

The average correlation between a team's win percentage on June 1 and its final winning percentage is 0.76. How high is a 0.76 correlation? Statisticians consider 0.7 a "significant" correlation and 0.8 a "strong" one. These are on a scale where 1.0 represents a direct statistical relationship and 0 represents no relation at all.

Right now, Armando Galarraga’s Diamondbacks are in first place. When Armando last pitched for the Diamondbacks, they were in last place. Against the Padres he only lasted five innings while allowing eight runs. The Diamondbacks then sent him down to the minor leagues and they have since won 14 out of their last 16 games. Sunday Armando made his pitching debut for the Reno Aces and allowed six hits and five walks in five innings. The only run he allowed was of course a home run.

SBA 7(a) Weekly Lending Update

SBA 7(a) loans approvals bumped up to $270,991,000 for the week ending May 20th.  That brings the year to date total to $13,944,325,000.

There are 18 weeks left in the SBA's fiscal year and only $3,555,675,000 remaining for the SBA 7(a) program.  That less than $200 million per week.

SBA Turn Around Time

For those of you who think you should only work with a PLP lender, you are mistaken.  We recently assisted a lender in submitting a deal to SBA through the Guaranty Loan Processing Center and obtained our approval in less than a week. 

For start to finish it was actually four days.

The SBA and self-storage

SBA loans are well suited for self-storage facilities.

According to the Self Storage Association, there are 2.21 billion square feet of self-storage in this country. That means there are more than 7 square feet of storage per U.S. resident.


You might want to check out this article from Inc. magazine:

http://www.inc.com/best-industries-2010/self-storage-and-mini-storage-leasing-industry.html

SBA 7(a) Weekly Lending Update

Another $250,053,000 in SBA 7(a) loans were approved for the week ending May 13th.  That brings the year to date total to $13,673,334,000.  $17,500,000,000 has been appropriated for the fiscal year which ends September 30th.  That 19 weeks away which means the 7(a) program could run out of money before the year ends.

The SBA and macerate

macerate
(MAS-uh-rayt)
1. To soften by soaking or steeping in a liquid.
2. To separate into parts by soaking.
3. To weaken or to become thin; to emaciate.
From Latin macerare (to make soft, weaken).
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TIP OF THE WEEK

Community banking has been macerated. Economic and market shifts have also macerated commercial real estate. The boom of the last decade is gone.

Un-macerated are SBA loans.

The May issue of the CB Journal takes a look at community banking, real estate, and how SBA loans have changed in a big way.

For a copy of this month’s issue, go here: http://cb-resource.com/CBJournal/04CBJournal_May11.pdf
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Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate May 2011 = 3.21%
SBA Fixed Base Rate May 2011 = 5.96%
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504 Debenture Rate for May

The debenture rate is 3.79% but note rate is 3.85% and effective yield is only 5.639%.
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AHEAD OF THE YIELD CURVE

The government had to borrow another $72 billion last week to keep paying for all the wonderful things they are doing to us.

Included in all that borrowing was $16 billion in 30 year bonds that sold at a yield of 4.35 percent. The yield touched 4.25 percent on May 5, the lowest level since December 7, after rising to 4.79 percent on Feb. 9. Last month’s auction drew a yield of 4.531 percent.

This dip in the yield curve coincides with a dip in the Ceridian-UCLA Pulse of Commerce Index. This index is based on real-time diesel fuel consumption data for over the road trucking and serves as an indicator of the state and possible future direction of the U.S. economy. By tracking the volume and location of fuel being purchased, the index closely monitors the over the road movement of raw materials, goods-in-process and finished goods to U.S. factories, retailers and consumers. It fell 0.5 percent in April.

The Ceridian-UCLA Pulse of Commerce Index tends to lead industrial production which in turn dictates capacity utilization rates.

The capacity utilization rate, which measures how much plants and factories are being used, has been steadily climbing since reaching a historic low in August of 2009 of only 68.2%.

Keep your eye on Tuesday's release from the Federal Reserve on Industrial Production and Capacity Utilization.

Here is what capacity utilization rates have done:

1997- 83.6
1998- 83.0
1999- 82.4
2000- 82.6
2001- 77.4
2002- 75.6
2003- 74.6
2004- 79.2
2005- 80.7
2006- 82.4
2007- 81.5
2008- 79.9
2009- 69.9
2010- 74.8
2011- 77.4

What does all this mean?

I don't know.

Last month, the rate of capacity utilization for total industry rose 0.5 percentage point to 77.4 percent, a rate 3.0 percentage points below its average from 1972 to 2010. In December it was at 76.3 percent.

One of the Federal Reserve’s favorite gauges of the economy is the capacity utilization rate. The Federal Reserve watches capacity utilization rates to see if production constraints are threatening to cause inflationary pressures. Bottlenecks or shortages often lead to inflationary pressures that would drive prices even higher. Several analysts have pointed to a rate between 81% and 82% as a tipping point over which inflation is spurred.

Capacity utilization at 77.4% is still far below normal - and well below the pre-recession levels of 81.2% in November 2007.

That means we still have a long way to go before interest rates really start to go up.
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OFF BASE

In case you haven’t heard, the world is supposed to end this Saturday.

May 21st is being heralded as Judgment Day--the time when the earth will be destroyed due to mankind's sins. The guy making this prediction had previously said that the world would end on September 6, 1994. The world did not end on that day evidently due to a mathematical error.

May 21st is also the birthday of Monty Stratton. He would have been 99 years old. Stratton pitched for the Chicago White Sox in late 1930’s and was recognized as one of the top pitchers in the American League. However, a freak hunting accident caused Monty’s right leg to be amputated. Throughout the early- and mid-1940s, Stratton attempted to come back from his injury, pitching in the minors while hopping around on a crude wooden leg. His return to baseball encountered difficulties because other teams persistently bunted balls out of his reach, but Stratton finally was able to make a successful comeback, winning 18 games with the Class-C Sherman Twins of the East Texas League. His comeback attempt was the subject of the 1949 film The Stratton Story which starred Jimmy Stewart.

Pitching on two perfectly good legs still is Arizona Diamondback Armando Galarraga. Armando gave up another home run last Wednesday against the Giants and now has allowed 12 home runs over only 37 2/3 innings. At this rate Armando has an excellent shot of setting a new record for home runs allowed by a pitcher in a single season. He pitches again tonight against the Padres.

SBA 7(a) Weekly Lending Update

SBA loan activity jumped up a little bit.  Another $260,154,000 in SBA 7(a) loans were approved for the week ending May 6th.  

That leaves only $4,076,719,000 left in the program until the fiscal year ends on September 30th.  That's 20 weeks away meaning loan approvals would have to average $203,836,000 per week to last. 

SBA 7(a) Rate Update

Indices:


PRIME RATE= 3.25%

SBA LIBOR Base Rate May 2011 = 3.21%

SBA Fixed Base Rate May 2011 = 5.96%

Lenders can charge up to 2.75% over these indices

SBA 7(a) Weekly Lending Update

Is the SBA 7(a) loan program going to run out of money?

Another $234,146,000 in SBA 7(a) loans were approved during the week ending April 29th.  That brings the year to date total to $13,163,127,000.   A total of $17,500,000,000 in SBA 7(a) loans are authorized for the fiscal year which ends September 30th.  

That leaves us with $4,336,873,000 remaining.  With 21 weeks left in the fiscal year loan approvals need to average $206,517,760 per week or the SBA runs out of money.

The SBA and sisyphean

Sisyphean

(sis-ee-FEE-uhn)

Endlessly laborious and fruitless.

Sisyphus, a king in Greek mythology was cursed to push a huge boulder to the top of a hill, only to watch it roll back down and to repeat this forever.
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TIP OF THE WEEK

The sisyphean struggle with commercial real estate presents opportunities for both buyers and lenders.

Moody's reported last week that the Moody’s/REAL All Property Type Aggregate Index declined 3.3% in February and 4.9 percent from a year earlier. According to Moody's, CRE prices are down 4.9% from a year ago and down about 44.7% from the peak in 2007. Prices are just above the post-bubble low last August - and about at the levels of 2002.
If you would like a copy of Moody’s April 2011 report, let me know.

Either a SBA 504 loan or 7(a) loan can be used for the purchase or refinance of owner-user commercial real estate.
_________________________________

Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate April 2011 = 3.24%
SBA Fixed Base Rate April 2011 = 6.24%
___________________________________

504 Debenture Rate for April

The debenture rate is 4.05% but note rate is 4.11% and effective yield is only 5.90%.
______________________________________

AHEAD OF THE YIELD CURVE
Economic recovery plods along with a Sisyphean pace.



Our economy grew slower in the first quarter as government spending declined by the most since 1983. Gross domestic product rose at a 1.8 percent annual rate from January through March after a 3.1 percent pace in the last three months of 2010, the Commerce Department reported last week.


Has the rock rolled back down the hill with employment?

Keep your eye on Friday’s payroll report from the Department of Labor.

Here is a summary of net monthly payroll employment and this week’s interesting little table of data:

March 216,000
February 194,000
January 68,000


2010
December 121,000
November 93,000
October 210,000
September (41,000)
August (1,000)
July (66,000)
June (175,000)
May 431,000
April 218,000
March 230,000
February (36,000)
January (26,000)

2009
December (150,000)
November (11,000)
October (111,000)
September (215,000)
August (201,000)
July (304,000)
June (443,000)
May (322,000)
April (504,000)
March (699,000)
February (651,000)
January (655,000)

2008
December (681,000)
November (597,000)
October (423,000)
September (403,000)
August (127,000)
July (67,000)
June (100,000)
May (47,000)
April (67,000)
March (88,000)
February- (83,000)
January- (76,000)



What does all this mean?

I don’t know.

After meeting for two days, the Federal Reserve last week left its benchmark interest rate in a range of zero to 0.25 percent, where it’s been since December 2008, and retained a pledge in place since March 2009 to keep it “exceptionally low” for an “extended period.”

That’s because as they said “the unemployment rate remains elevated”

The likelihood policy makers will raise the target rate for the federal funds rate at their March 2012 meeting decreased to 44 percent, from 61 percent a month ago, Fed funds futures showed.
______________________________________

OFF BASE

Sisyphus probably needed a hug every time the rock rolled back down the hill.

According to the Hugs for Health Foundation, everybody needs a hug. They believe hugging nurtures the human spirit and is healthy for both the hugger and hugged.

This week is the Hugs for Health Foundation’s National Hug Holiday Week.

Better than a hug is a prayer.

Thursday is the National Day of Prayer.

Needing both a hug and a prayer is probably pitcher Armando Galarraga of the Diamondbacks. Friday he pitched seven innings and gave up only six hits. Three of those hits were home runs however and the Diamondbacks lost 4 -2. Galarraga has now allowed 11 homers in 28 innings. At this rate, Armando has an excellent shot of breaking Jose Lima’s record for allowing 48 home runs in the National League in a season. This is also Jose’s first year of eligibility for entering into the Baseball Hall of Fame. He doesn’t have a prayer.

Life is short, pray hard.

SBA 7(a) Weekly Lending Update

SBA approved $205,494,000 in SBA 7(a) loans for the week ending April 22.  Year to date total is now up to $12,928,981,000.

This is a slight drop from last week and a big drop from the week prior to that when volume had spiked to $568 million.  That spike was obviously a result of lenders submitting as many deals as they possibly could before the SBA may have shut down.

With the threat of a shutdown now behind us, the challenge will be if the SBA 7(a) program runs out of money before the end of the fiscal year on September 30th.

SBA loans for self storage facilities- cash flow

For SBA loans, the borrower’s ability to repay the loan from the cash flow of the business is the most important consideration in the loan making process.

SBA allows lenders to determine repayment ability through either an analysis of actual cash flow or by using the “rule of thumb” method. “Rule of thumb” cash flow is defined as earnings before interest and taxes, plus depreciation and amortization, less total debt service.

If a self storage facility can demonstrate repayment ability based upon this rule of thumb approach, it can most likely obtain a SBA loan.

Another SBA success story

If you ever shop for sports or camping apparel, you inevitable will run across Columbia Sportswear. 

This company received a SBA loan for $15,000 back in 1970. 

Columbia Sportswear Company located in Portland, Oregon was rescued from near bankruptcy when Gert Boyle took over operations of Columbia, started by her parents, and turned it into a $1 billion company.

Columbia's story, along with others, is available online from SBA at:
http://www.sba.gov/AmericasBest

SBA 7(a) Weekly Lending Update

Another $217,653,000 in SBA 7(a) loans were approved last week.  This is big drop from the prior week when about $568,000,000 had been approved.   I have no idea why loan volume spiked but it could very well be a reporting issue with SBA.

With about six months still left in the fiscal year, $12,723,487,000 in SBA loans have been approved out of a total of $17,500,000,000 available.  If SBA loan volume sticks around $200,000,000 a week the program won't run out of money.  Anything greater than that means funding could dry up in the summer.

To put this into perspective, only $3,855,352,000 had been approved for the first six months of 2009, while $8,162,168,000 had been approved for the first six months of 2010.  The $12,732,487,000 in approvals for the last six months was driven primary by the Jobs Act enhancements of the increased guarantee percentage and waiver of the guarantee fee, but since expiration of those enhancements, loan demand still is robust. 

Borrowers and lenders alike continue to turn to the SBA 7(a) program.

SBA 504 debenture rate

SBA 504 debenture rate for April
The debenture rate is 4.05%, the note rate is 4.11% and the effective yield is 5.900%.

The SBA and the budget

While many federal agencies will take a haircut in the spending bill negotiated last weekend between Senate Democrats and House Republicans -- -- the Small Business Administration has emerged from the negotiations largely intact. The bill trims 0.2 percent from every nonmilitary discretionary account, including those that finance the S.B.A. But it also aims at specific programs with deeper cuts, and here the S.B.A. was effectively spared. . . . go here for the article in the New York Times...
http://boss.blogs.nytimes.com/2011/04/12/s-b-a-spared-in-2011-spending-deal/?partner=rss&emc=rss
 

SBA 7(a) Weekly Lending Update

According to the SBA, $568,760,000 in SBA 7(a) loans were approved last week.  This is a significant increase over the prior weeks.

Year to date, $12,505,834,000 in SBA 7(a) loans have been approved.     The entire 7(a) program is authorized for $17,500,000,000.  

7(a) loan funding could very well run out before the fiscal year ends in September.

The SBA and meretricious

meretricious
(mer-i-TRISH-uhs)
1. Appealing in a cheap or showy manner: tawdry.
2. Based on pretense or insincerity.
From Latin meretricius, meretrix (prostitute), from merere (to earn money).
___________________________________________
TIP OF THE WEEK
The meretricious debate on government spending and the budget extends to SBA loans.

Total credit subsidy appropriations are proposed to go from $83 million in FY 2010 to $215 million in FY 2012. Of course, using the governments’ calculator the $215 million proposed for FY 2012 will be a DECREASE from the actual FY 2011 appropriation when considering the $505 million in Jobs Act money. As a result, funding is increasing while at the same time decreasing. Don't you just love government speak?
_______________________________________
Indices:

PRIME RATE= 3.25%
SBA LIBOR Base Rate April 2011 = 3.24%
SBA Fixed Base Rate April 2011 = 6.24%
________________________________________________

504 Debenture Rate for March

The debenture rate is 4.09% but note rate is 4.15% and effective yield is only 5.94%.
________________________________________________


AHEAD OF THE YIELD CURVE

The economy may be stalling a bit based upon capacity utilization rates.

This obscure gauge, which measures how much plants and factories are being used, has been steadily climbing since reaching a historic low in August of 2009 of only 68.2%.

Keep your eye on Friday’s release from the Federal Reserve on Industrial Production and Capacity Utilization.

Here is what capacity utilization rates have done:

1997- 83.6



1998- 83.0



1999- 82.4



2000- 82.6



2001- 77.4



2002- 75.6



2003- 74.6



2004- 79.2



2005- 80.7



2006- 82.4



2007- 81.5



2008- 79.9



2009- 69.9



2010- 74.8



2011- 76


What does all this mean?

I don't know.

Capacity utilization, which measures the amount of a plant that is in use, fell to 76.3 percent in February from a revised 76.4 percent in January. In December it was at 76.3 percent.

One of the Federal Reserve’s favorite gauges of the economy is the capacity utilization rate. The Federal Reserve watches capacity utilization rates to see if production constraints are threatening to cause inflationary pressures. Bottlenecks or shortages often lead to inflationary pressures that would drive prices even higher. Several analysts have pointed to a rate between 81% and 82% as a tipping point over which inflation is spurred.

Capacity utilization at 76% is still far below normal - and well below the pre-recession levels of 81.2% in November 2007.

That means we still have a long way to go before interest rates really start to go up.
______________________________________________
OFF BASE

“It ain’t the heat, it’s the humility”
-Yogi Berra


Humility is good for us all. Humidity might even be better for others. Baseball physicists (yes, there really are such people) found that when the relative humidity is increased from 30 percent to 50 percent, the weight of the ball increases causing fewer home runs.

Coors Field in mile-high Denver has been long viewed as a batter’s paradise and a pitcher’s nightmare. Because the air density in Denver is approximately 80 percent of that at sea level, fly balls hit there carry farther. For the first seven seasons at Coors, there were 3.20 home runs hit per game. However, beginning in 2002 the Colorado Rockies began to store their baseballs in a humidor at a constant 50 percent relative humidity as opposed to the more typical 30 percent humidity in Denver. Ever since then, only 2.39 home runs were hit per game.

At Chase Field where the Arizona Diamondbacks play, the typical relative humidity is even lower than in Denver. It’s around only 20 percent. The Diamondbacks recently decided to NOT store balls in a humidor like they do at Coors Field.

Some baseball moisture experts concluded that the humidor idea could have reduced home runs at hitter-friendly Chase Field between 38 percent and 54 percent.

That’s too bad for the imperfect pitcher, Armando Galarraga. Armando made a successful debut for the Diamondbacks in Chicago against the Cubs. He allowed just two walks while striking out five in seven innings of work. He gave up only five hits but two of those were home runs. Home runs have always been a problem for Galarraga, and when he eventually pitches in Arizona, that stadium won’t help.

Armando next pitches Tuesday in Arizona against the Cardinals.

SBA 7(a) Weekly Lending Update

$270,541,000 in SBA 7(a) loans were approved last week.  That brings the year to date total to $11,937,074,000.

SBA 7(a) loans remain one of the most viable and attractive options to both lenders and borrowers.

Killing the goose that lays the golden egg

The Congressional Quarterly daily reports today (4/5) that "prospects of at least a temporary shutdown have surged today. Both the White House and Hill leaders are taking the situations seriously enough that they’re getting ready to sort-of lock up. This morning congressional offices (at least on the House side) were receiving a memo from the leadership telling chiefs of staff the difference between “essential” and “non-essential” employees and which House support offices could be closed. Last night the White House told top agency officials to begin making preparations for implementing a shutdown."

What that means to SBA lenders and borrowers is that no loan approvals will happen if and when the government shuts down.

 

SBA 7(a) Weekly Lending Update

SBA 7(a) loans are alive and well.

Another $268,569,000 in SBA 7(a) loans were approved last week.  That brings the year to date total to $11,666,533,000. 

The SBA and ending the recession ONE LOAN at a time

We have funded another SBA 7(a) loan.

This time it was a $1,485,000 SBA 7(a) loan to refinance a mortgage and install solar panels on the warehouse roof of a company that specializes in providing items used in fund raisers for schools and charities.


Since 2000 we have closed over $760,535,899 in SBA 7(a) and 504 1sts.

504 debt refinance

The Small Business Administration will allow more businesses to refinance their commercial real estate mortgages through its 504 loan program. The SBA initially restricted this new refinancing option to small businesses that faced balloon payments on their mortgages before Dec. 31, 2012. Beginning April 6, it will open the 504 refinancing option to businesses with balloon payments due after that date.

The SBA and obloquy

obloquy

(OB-luh-kwee)

1. Censure or abusive language towards someone, especially when expressed by many.

2. Disgrace resulting from public condemnation.

From Latin obloquium (talking against, contradiction), from ob- (against) + loqui (to speak).



______________________________________________



TIP OF THE WEEK

Obloquy for commercial real estate?

The Moody’s/REAL All Property Type Aggregate Index declined 1.2% in January. According to Moody's, CRE prices are down 4.3% from a year ago and down about 43% from the peak in 2007.

CoStar however said values were up 11 percent from January 2010. CoStar, unlike Moody’s, tracks transactions of less than $2.5 million. CoStar also limits its index to class A and B offices, the highest-quality buildings; retail and industrial properties built since 1990; and multifamily buildings of 30 units or more.

If you like a copy of either the Moody’s or CoStar report let me know.

SBA loans are exceptionally well suited to finance or refinance any owner user real estate.
__________________________________

Indices:

PRIME RATE= 3.25%

SBA LIBOR Base Rate March 2011 = 3.26%

SBA Fixed Base Rate March 2011 = 6.20%
___________________________________________
504 Debenture Rate for March

The debenture rate is 4.09% but note rate is 4.15% and effective yield is only 5.94%.
___________________________________________

AHEAD OF THE YIELD CURVE

Obloquies will continue to fly with so many people still out of work.

Over 8 million jobs were lost in the great recession.

Last month, employers in the U.S. added 192,000 workers. This gain in payrolls for February follows a 63,000 increase in January.

Keep your eye on Friday’s payroll report from the Department of Labor.


What does all this mean?

I don’t know.

For all of 2010, about 1.1 million jobs were created, the most since 2006.

That’s a start, but we’ve got a long ways to go. There are still over 7 million fewer jobs in the U.S. compared to the peak of employment in 2007. If the U.S. economy adds 200,000 jobs per month, it will take 3 years to get back to the previous peak. And that doesn't include jobs needed to offset population growth (about 125,000 jobs per month).

As a result, when the Federal Open Market Committee met two weeks ago, they continued to say conditions "likely to warrant exceptionally low levels for the federal funds rate for an extended period".

Until we see continued and robust improvement in the labor market, interest rates will remain low.

______________________________________________

OFF BASE

Obloquies at baseball games are more often referred to as heckles.

Baseball heckling goes back to the 19th century. The term ‘heckle’ comes from the textile trade. If you heckled you combed out flax or hemp fibers. The current meaning today started as a name for the workers who combed the flax, as they were some of the most unruly people in the workforce.

Perhaps the most clichéd heckle of all time, “Kill the Ump!” was first recorded in Ernest L. Thayer’s 1888 poem “Casey at the Bat.”

Needling the umpire is a time-honored baseball tradition. It is also legal, a New York State appeals court ruled in 1987. In the unanimous decision, Justice Betty Weinberg Ellerin quoted, among others, General Douglas MacArthur. It was General MacArthur, the judge wrote, ''who is reported to have said on his return to American soil that he was proud to protect American freedoms, like the freedom to boo the umpire.''

If anyone had a perfect opportunity to heckle an umpire, it was pitcher Armando Galarraga last season. While playing for the Detroit Tigers, he lost a perfect game following a wrong call made by umpire Jim Joyce in the top of the ninth with two outs. Replays showed that Galarraga, covering at first for a grounder to the first baseman, got the throw and touched the base a stride ahead of the runner, but Joyce inexplicably called him safe. With the perfect game stolen from him, Galarraga simply smiled, shrugged his shoulders, and got the next batter out for a one-hitter that should have been perfect.

To his credit, Joyce apologized after the game and admitted he blew the call. Galarraga accepted the mistake gracefully, saying later, “Nobody’s perfect.”

Armando now pitches for the Arizona Diamondbacks. He had his best outing of the spring Friday against the Dodgers, as he allowed three runs on five hits over six innings. He next pitches Wednesday in the last spring training game of the year.

Getting Money Into the Hands of Small Business

From today's Wall Street Journal...
Getting Money Into the Hands of Small Businesses - WSJ.com

The recession's grip on small-business owners has loosened, but unemployment remains stubbornly high and access to credit is still tight.

SBA 7(a) loans however are going strong...

Is the SBA going to run out of money?

Another $228,164,000 in SBA 7(a) loans were approved last week by SBA.

That brings the year to date total to $11,397,964,000. Average loan size is now up to $417,390.

With over six months still left in the SBA's fiscal year, funding for SBA loans might get tight.

The SBA and ending the recession ONE LOAN at a time

We have funded another SBA 7(a) loan.

This time it was a $156,000 loan to a glass blower to refinance debt and provide additional working capital.

What happens when he inhales? He has glass panes!

We have now helped borrowers obtain $758,250,899 in both SBA 7(a) and 504 loans since 2000.

SBA 7(a) Weekly Lending Update

For the week ending March 11th, the SBA approved $254,170,000 in SBA 7(a) loans.

The new $5,000,000 loan size is having an impact on loan volume.

While January volume was off somewhat in January following the Jobs Act funding expiration in December, loan volume has since increased. February approvals were around $50 million per business day, and March numbers are closer to $75 million per day.

There is a distinct possibility that we will see loan demand in excess of the authorized level for this fiscal year.

504 debenture rate

SBA 504 Debenture Rate for March
The debenture rate is 4.09% but note rate is 4.1538% and effective yield is only 5.941%.

The SBA and atrabilious

atrabilious
(at-ruh-BIL-yuhs)
Gloomy or Ill-tempered.
From Latin atra bilis (black bile), translation of Greek melankholia.
_____________________________________________________
TIP OF THE WEEK
You have NO reason to be atrabilious.

Spring is in the air.

SBA 7(a) loans can now go up to $5,000,000.

504 loans can actually refinance debt.
_______________________________________
Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate March 2011 = 3.26%
SBA Fixed Base Rate March 2011 = 6.20%
________________________________________________
504 Debenture Rate for February
The debenture rate is 4.22% but note rate is 4.285% and effective yield is only 6.071%.
________________________________________________
AHEAD OF THE YIELD CURVE
Is this economy making you atrabilious?

Last month, employers in the U.S. added 192,000 workers. Maybe even more.

This gain in payrolls for February follows a 63,000 increase in January. Originally the Labor Department had said January jobs had increased by only 36,000. The change in total nonfarm payroll employment for December was also revised up from +121,000 to +152,000.

So far so good, right?

Industrial production however decreased 0.1 percent in January 2011 after having risen 1.2 percent in December. The capacity utilization rate edged down to 76.1 percent. The capacity utilization rate measures the amount of a plant that is in use. This gauge averaged 80 percent over the past 20 years, signaling there’s enough spare plant equipment and space to prevent bottlenecks that would push prices higher.

Keep your eye on Thursday’s release from the Federal Reserve on Industrial Production and Capacity Utilization.

Here is what capacity utilization rates have done:

1997- 83.6
1998- 83.0
1999- 82.4
2000- 82.6
2001- 77.4
2002- 75.6
2003- 74.6
2004- 79.2
2005- 80.7
2006- 82.4
2007- 81.5
2008- 79.9
2009- 69.9
2010- 74.8
2011- 76

What does all this mean?

I don't know.

One of the Federal Reserve’s favorite gauges of the economy is the capacity utilization rate. The Federal Reserve watches capacity utilization rates to see if production constraints are threatening to cause inflationary pressures. Bottlenecks or shortages often lead to inflationary pressures that would drive prices even higher. Several analysts have pointed to a rate between 81% and 82% as a tipping point over which inflation is spurred.

Capacity utilization at 76% is still far below normal - and well below the the pre-recession levels of 81.2% in November 2007.


That means we still have a long way to go before interest rates really start to go up. The Federal Open Market Committee meets on Tuesday.
_________________________________________________
OFF BASE

Daylight Shifting Time meant that the sun did not rise this morning until 7:08. It will take 46 days for the sun to rise at 6:08 like it should. What a perfectly horrible way to ruin dawn surf patrols. Opps, I’m being atrabilious.


These late mornings mean people can sleep in after Evacuation Day this Thursday. Evacuation Day? Don’t I mean Saint Patrick’s Day? Saint Patrick’s Day is a holiday celebrating the patron saint of Ireland who banished snakes from the island, but post-glacial Ireland never actually had snakes.



In America, the fervor for Saint Patrick’s Day as a celebration did not really occur until March 17th, 1776 when the 11-month siege of Boston ended. The Continental Army placed captured cannon from Fort Ticonderoga onto Dorchester Heights in South Boston. To prevent what would have been an inevitable slaughter of his troops, British General Howe agreed to retreat to Nova Scotia via his ships without setting the city on fire as he left. That the Americans were able to drive off several thousand hardened troops and 1,100 loyalists with only a few warning shots fired and no loss of life or property was a major accomplishment and was Washington's first victory of the war. It was a huge morale boost for the new country, as the city where the rebellion against England started was the first to be liberated. Boston was never attacked again. The ensuing years recognized March 17th as Evacuation Day.



Irish American Catholics, perhaps confused by too much Guinness, mistook the revelry as a celebration of Saint Patrick instead of Evacuation Day.


Happy Evacuation Day!

The SBA and ending the recession ONE LOAN AT A TIME

We have closed another SBA 7(a) loan.

This time it was a $500,000 SBA 7(a) loan for the purchase of a powder coating company.

Since 2000, we have closed $758,094,899 in SBA 7(a) and 504 loans.

SBA 7(a) Rate Update

Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate March 2011 = 3.26%
SBA Fixed Base Rate March 2011 = 6.20%

Lenders can charge up to 2.75% over these indices

The SBA and ending the recession ONE LOAN AT A TIME

We have funded another loan.

This time it was a SBA 7(a) loan for $350,000 to a software company developing on-line comic books.

So far we have funded $757,574,899 in SBA 7(a) and SBA 504 first trust deeds since 2000.

The SBA and ending the recession ONE LOAN AT A TIME

We have funded another loan.

This time it was a $430,000 SBA 7(a) loan for the purchase of a doctor's office.

We have funded $757,224,899 in SBA 7(a) and 504 1st trust deeds in the last ten years.

The SBA and meticulous

meticulous
(muh-TIK-yuh-luhs)
Extremely careful, precise, or thorough.
From Latin meticulosus (fearful), from metus (fear). Originally the term meant one who was fearful and eventually it acquired a positive sense.
_____________________________________________________
TIP OF THE WEEK
Be meticulous about 504 debt refinance.

Starting TODAY, SBA is accepting applications to refinance mortgage debt with a 504 loan.
The debt to be refinanced must be coming due before December 31, 2012.
Borrowers can refinance up to 90 percent of the current appraised property value or 100 percent of the outstanding mortgage, whichever is lower.
Loan proceeds may NOT be used for any other business expenses such as working capital.
There will also be an ongoing guarantee fee of 1.043% on the total unpaid balance of the debenture that increases the effective yield to the borrower.

If a borrower is unable to refinance their mortgage debt with a SBA 504 loan, a SBA 7(a) loan may be a viable option.
_______________________________________
Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate February 2011 = 3.26%
SBA Fixed Base Rate February 2011 = 6.16%
________________________________________________
504 Debenture Rate for February
The debenture rate is 4.22% but note rate is 4.285% and effective yield is only 6.071%.
________________________________________________
AHEAD OF THE YIELD CURVE
How meticulous are bond investors?

The yield curve has dipped down a little bit.
The 30 year Treasury bond is down to 4.50% which is the lowest it has been in a month.
Many attribute the drop in longer term rates to the unrest in Libya driving investors to the safety of our government debt and concerns that surging oil prices may stall the economy.
Lost in the headlines was the news that the capacity utilization rate dipped last month. Job growth also stalled in January.

Keep your eye on Friday’s payroll report from the Department of Labor.
Here is a summary of net monthly payroll employment and this week’s interesting little table of data:
January 36,000
December 121,000
November 93,000
October 210,000
September (41,000)
August (1,000)
July (66,000)
June (175,000)
May 431,000
April 218,000
March 230,000
February (36,000)
January (26,000)
2009
December (150,000)
November (11,000)
October (111,000)
September (215,000)
August (201,000)
July (304,000)
June (443,000)
May (322,000)
April (504,000)
March (699,000)
February (651,000)
January (655,000)
2008
December (681,000)
November (597,000)
October (423,000)
September (403,000)
August (127,000)
July (67,000)
June (100,000)
May (47,000)
April (67,000)
March (88,000)
February- (83,000)
January- (76,000)

What does all this mean?

I don’t know.
For all of 2010, about 1.1 million jobs were created, the most since 2006.
That’s a start, but we’ve got a long ways to go.
There are still over 7 million fewer jobs in the U.S. compared to the peak of employment in 2007.
If the U.S. economy adds 200,000 jobs per month, it will take 3 years to get back to the previous peak. And that doesn't include jobs needed to offset population growth (about 125,000 jobs per month).


The Federal Open Market Committee meets again March 15th. How meticulous will they be?
_________________________________________________
OFF BASE
Did you enjoy last Monday’s holiday?
Our next three day weekend is not until Memorial Day. That’s 92 days away.
If you check out the calendar it turns out that this is the longest streak of the year we have to go without a break from the five day grind.

Was it this long lull that inspired Ferris Bueller to take his famous day off?
Meticulous observation of “Ferris Bueller’s Day Off” reveals that his day off was actually June 5th, 1985.
How does one figure that out?

On Ferris's agenda that afternoon was, naturally, a trip to Wrigley Field.
On the screen we see Chicago first-baseman #10 holding on an Atlanta Braves player wearing #18. The announcer pipes in: "Runner on first base, nobody out. That's the first hit they've had since the fifth inning, and only the fourth hit in the game."
Chicago pitcher #46 throws the pitch to a left-handed Atlanta hitter with a two-digit number ending in "5" and what appears to be a long last name. The batter swings at the pitch and hits a long fly ball to left. "That's a drive! Left field... twisting... and into foul territory."
The Chicago leftfielder races for the ball but it screams foul, into Ferris' hand.
The movie "Ferris Bueller's Day Off" was released on June 11, 1986. The ballgame then must have been filmed either real early in the 1986 season or sometime during 1985. Looking at all the box scores from those seasons, we see that there was no game in 1986 in which Lee Smith (#46) faced the Braves at Wrigley Field. There were four such games in '85, though Smith left the Braves hitless in one of those. Of the remaining three games, it isn't hard to find the game we're looking for.
The foul ball that Ferris caught was hit by Atlanta rightfielder Claudell Washington (#15) in the top of the 11th inning. The game was tied at two and backup second-baseman Paul Zuvella (#18) was being held on first by Leon Durham (#10) after a leadoff single (the fourth hit of the game, and Atlanta's first hit since the fifth). Washington would end his at-bat with a flyball to leftfielder Davey Lopes. The next batter, Rafael Ramirez, would wind up hitting a two-run home run and the Braves would go on to win 4-2.

Only 30 days until Opening Day. Maybe that should be a holiday.

SBA 7(a) loans with variable rates

SBA 7(a) loans have variable rates tied to prime. Typically the rate can be up to prime plus 2.75%. It will usually adjust on a monthly or quarterly basis depending on the lender.

The idea of a variable rate may sound terrifying to some, but the prospects of increases in interest rates are far off. To get an idea of how long you can take advantage of the variable rate of a SBA 7(a) loan, you might want to go here:

When will the Fed raise rates?
by CalculatedRisk on 2/21/2011 05:08:00 PM
Short answer: it is very unlikely that the Fed will increase the Fed funds rate this year.

The earliest the Fed will raise rates? It could be later in 2012 or even later ...

The SBA and the budget

Total credit subsidy appropriations are proposed to go from $83 million in FY 2010 to $215 million in FY 2012. Of course, using the governments’ calculator the $215 million proposed for FY 2012 will be a DECREASE from the actual FY 2011 appropriation when considering the $505 million in Jobs Act money. As a result, funding is increasing while at the same time decreasing. Don't you just love government speak?

504 debenture rate

SBA 504 Debenture Rate for February
The debenture rate is 4.22% but note rate is 4.285% and effective yield is only 6.071%.

The SBA and philogyny

philogyny
(phi-LOJ-uh-nee)
Love of women.
From Greek philogynia, from philo- (loving) + -gyn (woman)
_____________________________________________________
TIP OF THE WEEK
Do you know the difference between a philanderer and philandrist? A philanderer is one who engages in frivolous love of women while a philandrist loves men. Philandrist comes from Greek philandros (loving of man), to refer to a woman who loves her husband. The term Philander was later used in literature to name a male character, apparently from the mistaken belief that it refers to a man who loves, rather than one who loves a man. The differences are not subtle.
Make sure you also know the differences between a SBA 7(a) loan and a SBA 504 loan. One has a variable rate while the other has a 10 year prepayment penalty. One can be used for commercial real estate debt refinance. The other might soon.
_______________________________________
Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate February 2011 = 3.26%
SBA Fixed Base Rate February 2011 = 6.16%
________________________________________________
504 Debenture Rate for January
The debenture rate is 3.89% but note rate is 3.951% and effective yield is only 5.951%.
________________________________________________
AHEAD OF THE YIELD CURVE
You’ve heard of quantitative easing?

That’s where the Federal Reserve said that it would buy $600 billion of U.S. government debt to spur job growth and avoid deflation.

The Fed said it will focus about 86 percent of its purchases in notes due in 2.5 years to 10 years. As a result, the 30 year Treasury bond has become the benchmark for the world’s biggest debt investors. The 30 year Treasury bond has also become the only government debt that most closely reflects market expectations for inflation and future growth.

Since the Fed’s November 3rd announcement about these debt purchases, the 30-year yield has jumped about ½ of a percent. The interest rate on the 30 year bond has risen about 125 percentage points from a 17-month low of 3.46 percent August 25th.

Last week the government sold $16 billion of 30 year bonds with a yield around 3.75%.

Last month’s sale of 30-year bonds drew a yield of 4.515 percent, compared with 4.410 percent at the December auction.

The bond’s average yield was 4.49 percent from Dec. 31, 2007, through Sept. 12, 2008, just before the collapse of Lehman Brothers.

Here is what the 30 year bond has been doing:
2001- 5.49
2002- 5.43
2003- ND
2004- ND
2005- ND
2006- 4.91
2007- 4.84
2008- 4.18
2009- 3.89
2010- 4.61

What a minute, why no numbers for 2003, 2004, and 2005?

One month after the 9/11 attacks, the Treasury 30 year bond is discontinued. When the Treasury mothballed the 30-year bond in 2001, experts speculated it was trying to drive down long-term interest rates, which had remained stubbornly high while the Federal Reserve was slashing short-term interest rates to revive the economy. When the Treasury discontinued the 30-year bond in 2001, its yield fell 35 basis points in one day. Why? A shrinking supply of the 30-year Treasury bond caused increased demand to drive rates down.

What does all this mean?

I don’t know.

One of the reasons the Fed is keeping rates low is because of “low rates of resource utilization.”

Keep your eyes and ears open for Wednesday’s release on capacity utilization. This is one of the Federal Reserve’s favorite measures of inflationary expectations.

Capacity utilization, which measures the amount of a plant that is in use, increased to 76 percent last month, the highest since August 2008. The gauge averaged 80 percent over the past 20 years, signaling there’s enough spare plant equipment and space to prevent bottlenecks that would push prices higher. Several analysts have pointed to a rate between 81% and 82% as a tipping point over which inflation is spurred.

Capacity utilization at 76% is still far below normal - and well below the the pre-recession levels of 81.2% in November 2007.

It would appear that the savings from low variable rates of interest should continue for an "extended" period.
_________________________________________________
OFF BASE
I think everybody knows what day today is. It goes without saying. It is a day filled with romance and hope.

Yes, today is the day some pitchers and catchers start showing up for spring training.

With only 44 days left until Opening Day even fans of the worst teams think right now they have a chance.

The two teams with the worst odds for winning the 2011 World Series are the Pittsburgh Pirates and Kansas City Royals.

Here are the odds for the rest of the teams to win the World Series.
Keep in mind, last year the San Francisco Giants were 25/1 odds at the beginning of last season.

Arizona Diamondbacks 100/1
Atlanta Braves 22/1
Baltimore Orioles 80/1
Boston Red Sox 5/1
Chicago Cubs 35/1
Chicago White Sox 20/1
Cincinnati Reds 25/1
Cleveland Indians 100/1
Colorado Rockies 22/1
Detroit Tigers 28/1
Florida Marlins 40/1
Houston Astros 75/1
Kansas City Royals 150/1
Los Angeles Angels 25/1
Los Angeles Dodgers 30/1
Milwaukee Brewers 25/1
Minnesota Twins 20/1
New York Mets 40/1
New York Yankees 13/2
Oakland Athletics 30/1
Philadelphia Phillies 13/4
Pittsburgh Pirates 200/1
San Diego Padres 50/1
San Francisco Giants 14/1
Seattle Mariners 80/1
St. Louis Cardinals 20/1
Tampa Bay Rays 20/1
Texas Rangers 18/1
Toronto Blue Jays 50/1
Washington Nationals 80/1

SBA 7(a) Rate Update

Indices:

PRIME RATE= 3.25%
SBA LIBOR Base Rate February 2011 = 3.26%
SBA Fixed Base Rate February 2011 = 6.16%

Lenders can charge up to 2.75% over these indices.

The SBA and hecatomb

hecatomb

(HEK-uh-toom, -tom)

A large-scale slaughter.

Originally a hecatomb was a public sacrifice and feast of 100 oxen or cattle to the gods in ancient Greece and Rome. The word is derived from Latin hekatombe, from Greek hekatombe, from hekaton (hundred) + bous (ox).
_____________________________________________________
TIP OF THE WEEK
The hecatomb in commercial real estate is over.

The Moody’s/REAL All Property Type Aggregate Index recorded a 0.6% increase in November, the third consecutive month of national price gains.

This index measures overall commercial property values on a monthly basis. The changes are based on repeat sales transactions.

The National – All Property Type Aggregate Index has increased 6.4% during the past three months. These three months of rising prices contrast with the prior three months in which prices measured significant declines. Prices are up 2.8% from a year ago, down 31.6% from two years ago and are 41.6% below the peak, which occurred in October 2007.

If you would like a copy of Moody’s January 2011 report on commercial real estate, let me know.

Either a SBA 504 loan or a SBA 7(a) loan can finance commercial real estate.
_______________________________________
Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate January 2011 = 3.26%
SBA Fixed Base Rate January 2011 = 6.06%
________________________________________________
504 Debenture Rate for January
The debenture rate is 3.89% but note rate is 3.951% and effective yield is only 5.951%.
________________________________________________
AHEAD OF THE YIELD CURVE

Will there be a hecatomb for borrowers with variable rate loans?

The economy is improving. It accelerated in the fourth quarter of 2010 as consumer spending climbed by the most in more than four years.

Gross domestic product grew at a 3.2 percent annual rate. For all of 2010, the world’s largest economy expanded 2.9 percent, the most in five years, after shrinking 2.6 percent in 2009. The volume of all goods and services produced rose to $13.38 trillion, for the first time surpassing the pre-recession peak reached in the fourth quarter of 2007.
Household purchases, about 70 percent of the economy, rose at a 4.4 percent pace last quarter, the most since the first three months of 2006. The increase added 3 percentage points to growth.

Rates have to start going up, right?

Fed policy makers indicated last week that growth isn’t strong enough to reduce the jobless rate as fast as they would like.

Keep your eye on Friday’s payroll report from the Department of Labor.
Here is a summary of net monthly payroll employment and this week’s interesting little table of data:
December 103,000
November 71,000
October 210,000
September (41,000)
August (1,000)
July (66,000)
June (175,000)
May 431,000
April 218,000
March 230,000
February (36,000)
January (26,000)
2009
December (150,000)
November (11,000)
October (111,000)
September (215,000)
August (201,000)
July (304,000)
June (443,000)
May (322,000)
April (504,000)
March (699,000)
February (651,000)
January (655,000)
2008
December (681,000)
November (597,000)
October (423,000)
September (403,000)
August (127,000)
July (67,000)
June (100,000)
May (47,000)
April (67,000)
March (88,000)
February- (83,000)
January- (76,000)


What does all this mean?

I don’t know.

For all of 2010, about 1.1 million jobs were created, the most since 2006.


That’s a start, but we’ve got a long ways to go.

There are still over 7 million fewer jobs in the U.S. compared to the peak of employment in 2007.

If the U.S. economy adds 200,000 jobs per month, it will take 3 years to get back to the previous peak. And that doesn't include jobs needed to offset population growth (about 125,000 jobs per month).

The Federal Open Market Committee last week said that “economic conditions…..are likely to warrant exceptionally low levels for the federal funds rate for an extended period.”

Until employment really picks up, rates will remain low.
_________________________________________________
OFF BASE

No one is predicting a hecatomb in the Super Bowl.

The Green Bay Packers are only 2 ½ point favorites over the Pittsburgh Steelers.

This is the narrowest point spread in 27 years.

The last Super Bowl to have a point spread of less than three points was played after the 1983 season, when the Washington Redskins were 2 1/2-point favorites over the Raiders.

Of course the Raiders went on to win that game 38 – 9.

Rates to remain low for an extended period

The Federal Reserve Open Market Committee once again said that economic conditions "likely to warrant exceptionally low levels for the federal funds rate for an extended period."

That means the savings from a variable rate SBA 7(a) loan should persist for some time.

Go here for the complete statement from the Federal Reserve.

Everybody loves small business and the SBA

It looks like everybody loves the Small Business Administration. At least Republican members of the House of Representatives do. House GOP members today released their plan to cut $2 1/2 trillion in spending over the next ten years.

Noticeably absent from their chopping block was the SBA, and rightly so. This is one of the only government programs that actually pays for itself. If you calculate the cost of the program and then consider the increased tax revenues generated by SBA borrowers, it generates net revenue back to the goverment.

Call it supply side spending.

For more details on the proposed budget cuts, go here- http://news.yahoo.com/s/usnews/20110120/ts_usnews/housegoplists25trillioninspendingcuts

The SBA and assiduous

assiduous
(uh-SIJ-oo-uhs)
adjective: Constant; persistent; industrious.
From Latin assiduus, from assidere (to attend to, to sit down to), from ad- (toward) + sedere (to sit).
_____________________________________________________
TIP OF THE WEEK
Despite the assiduous efforts of many, the use of a 504 loan to refinance debt is still not yet available.

Currently a SBA 7(a) loan can be used to refinance real estate debt that has a balloon and it could also provide additional working capital if necessary.

Lenders and borrowers must be assiduous in their calculation of the SBA guarantee fee however. It’s back.

________________________________________
Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate January 2011 = 3.26%
SBA Fixed Base Rate January 2011 = 6.06%
________________________________________________
504 Debenture Rate for January
The debenture rate is 3.89% but note rate is 3.951% and effective yield is only 5.951%.
________________________________________________
AHEAD OF THE YIELD CURVE

Be assiduous in reading the tea leaves of the yield curve.

The yield curve is now very steep.

The difference between yields on U.S. 2- and 30-year securities has reached almost 4 percentage points. This is the steepest slope to the yield curve since at least 1977

Does this mean interest rates will soon rise?

Not necessarily.

Lost on the Friday of a three day weekend was the Federal Reserve’s release on capacity utilization.
Here is what capacity utilization rates have done:
1997- 83.6
1998- 83.0
1999- 82.4
2000- 82.6
2001- 77.4
2002- 75.6
2003- 74.6
2004- 79.2
2005- 80.7
2006- 82.4
2007- 81.5
2008- 79.9
2009- 69.9
2010- 74.8
2011- 76

What does all this mean?
I don't know.

Capacity utilization, which measures the amount of a plant that is in use, increased to 76 percent last month, the highest since August 2008, the Fed’s production report showed. The gauge averaged 80 percent over the past 20 years, signaling there’s enough spare plant equipment and space to prevent bottlenecks that would push prices higher.

One of the Federal Reserve’s favorite gauges of the economy is the capacity utilization rate. The Federal Reserve watches capacity utilization rates to see if production constraints are threatening to cause inflationary pressures. Bottlenecks or shortages often lead to inflationary pressures that would drive prices even higher. Several analysts have pointed to a rate between 81% and 82% as a tipping point over which inflation is spurred.

Capacity utilization at 76% is still far below normal - and well below the the pre-recession levels of 81.2% in November 2007.

That means we still have a long way to go before interest rates really start to go up.
_________________________________________________
OFF BASE

Ok, let’s not be so assiduous that we forget to stop and smell the roses, catch the waves or watch the sunsets.

Thank goodness for yesterday’s holiday.

It was an official holiday because the Federal Reserve Board said it was.

Here are the holidays this year that will be observed by the Federal Reserve Board:

Birthday of Martin Luther King, Jr.- January 17

Washington's Birthday- February 21

Memorial Day- May 30

Independence Day- July 4 Monday

Labor Day- September 3

Columbus Day- October 8 Saturday (bummer)

Veterans Day- November 12 Friday

Thanksgiving Day- November 22

Christmas Day- December 25


Notice the long stretch of no holidays from Washington’s Birthday to Memorial Day?

It looks like we need another holiday wedged in there and Opening Day for Major League Baseball in the perfect candidate.

Only 71 days until the season starts.

SBA 7(a) Rate Update

Indices:

PRIME RATE= 3.25%
SBA LIBOR Base Rate January 2011 = 3.26%
SBA Fixed Base Rate Januaary 2011 = 6.06%

Lenders can charge up to 2.75% over these indices.

504 debenture rate

SBA 504 Debenture Rate for January

The debenture rate is 3.89% but note rate is 3.951% and effective yield is only 5.951%.

The SBA and asseverate

asseverate
(uh-SEV-uh-rayt)
verb tr.: To affirm solemnly.
From Latin asseverare (to declare in earnest), from severus (serious).
You should asseverate to do more SBA loans.
_____________________________________________________
TIP OF THE WEEK
One New Year’s asseveration should be to check out commercial real estate.

Moody's reported just before Christmas that their REAL All Property Type Aggregate Index increased 1.3% in October. This index measures overall commercial property values on a monthly basis and breaks the numbers down by property type once each quarter. The changes are based on repeat sales transactions.

This is the second consecutive month to record an increase. Prices are now up 3.2% from a year ago. This presents a unique opportunity as values are down 34.4% in the past two years and have declined 41.9% since the peak, which occurred in October 2007.

People are beginning to notice as U.S. commercial property sales more than doubled to $16 billion in the third quarter compared with a year earlier, according to Real Capital Analytics Inc.

If you would like a copy of the Moody’s report on commercial real estate, let me know.
________________________________________
Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate December 2010 = 3.27%
SBA Fixed Base Rate December 2010 = 5.77%
________________________________________________
504 Debenture Rate for December
The debenture rate is 3.72% but note rate is 3.77% and effective yield is only 5.571%.
________________________________________________
AHEAD OF THE YIELD CURVE

Is now the time to buy real estate?

How long will interest rates remain low?

Both answers depend on unemployment. Job growth will fuel fundamental commercial real estate demand. Job growth will also affect what the Federal Reserve does with interest rates.

Keep your eye on Friday’s payroll report from the Department of Labor.

Here is a summary of net monthly payroll employment and this week’s interesting little table of data:

November 39,000
October 171,000
September (41,000)
August (1,000)
July (66,000)
June (175,000)
May 431,000
April 218,000
March 230,000
February (36,000)
January (26,000)
2009
December (150,000)
November (11,000)
October (111,000)
September (215,000)
August (201,000)
July (304,000)
June (443,000)
May (322,000)
April (504,000)
March (699,000)
February (651,000)
January (655,000)
2008
December (681,000)
November (597,000)
October (423,000)
September (403,000)
August (127,000)
July (67,000)
June (100,000)
May (47,000)
April (67,000)
March (88,000)
February- (83,000)
January- (76,000)

What does all this mean?

I don’t know.

There are 15.1 million unemployed people in this country. There are now 7.4 million fewer jobs in the U.S. compared to the peak of employment in 2007.

If the U.S. economy adds 200,000 jobs per month, it will take 3 years to get back to the previous peak. And that doesn't include jobs needed to offset population growth (about 125,000 jobs per month).

Until job gains are sustained, the Federal Reserve will have to keep interest rates low.
_________________________________________________
OFF BASE

What’s your New Year’s asseveration?

“A New Year’s Resolution is something that goes in one year and out the other.”
-Oscar Wilde

To be more precise, what Wilde was saying is that resolutions made the last week of December are usually over the first week of January.

There is a right way and a wrong way to make a New Year's resolution.

There is also a difference between men and women and their resolutions.

For men, they should set S.M.A.R.T goals- goals that are Specific, Measurable, Achievable, Realistic and Time based (SMART). For example, focus on creating bite-sized, measurable goals for each week. Map out the step-by-step mini-goals that will slowly but surely take you to where you want to be, make a note of them, and stick to the plan.

For women, the secret is to go public. For example, write down your resolution on a large sheet of paper, sign it, and place it somewhere prominent in your house. Tell your friends, family and colleagues about your resolution, and ask them to provide you with helpful nudges to assist you in achieving your goal. Do not keep your resolution to yourself.


Many people often make the mistake of trying to achieve too much. The chances of success are greater when people channel their energy into one thing.

For example, do you want your weight to be average? There are now more overweight people in America than average-weight people. So overweight people are now average… which means, you have met your New Year's resolution.

SBA loans Jobs Act Money exhausted

SBA quietly reactivated the Loan Queue on December 28 for the loans that could not be funded. Borrowers and lenders now will have to decide whether to have their loans processed immediately -- with the standard upfront guarantee fee and lower guarantee percentages; or, to wait in the queue for possible funding with the Jobs Act benefits as previously approved Jobs Act loans are cancelled.

How the Ginch stole Christmas from SBA lenders and borrowers

By a 193-165 vote, the House passed the Continuing Resolution last night which included an extension of the SBA loan fee waivers that were set to expire on 12/31/10.

The Continuing Resolution stated that SBA fee waivers will now be in place through 3/4/11 or until the remaining funds are exhausted from the initial $505 million in the September Jobs Act.

SBA has now indicated that the remaining funds are so limited it is unlikely they will last past the initial 12/31/10 expiration date. In fact, the current backlog of loans at SBA may utilize all of the remaining funds.

An early Christmas present for SBA Lenders and Borrowers- Fee Waiver extended!

The Senate is considering a longer term Continuing Resolution (CR) that will provide the federal government authority to continue operating.

Included in that CR is an extension of SBA's authority to grant fee waivers to 7(a) and 504 small business applicants and to offer higher guarantees (up to 90%) on 7(a) loans THROUGH MARCH 4, 2011, or until funds are expended, whichever occurs first!

More info can be found here- http://library.constantcontact.com/download/get/file/1102418459773-245/CR_summary.pdf

Merry Christmas

The SBA and the Fed- Exceptionally low interest rates for an extended period

The Federal Open Market Committee said the other day that they will keep interest rates "exceptionally low" for an "extended period."

That means the variable rate of a SBA 7(a) loan offers an unique opportunity for borrowers that will persist for some time.

So how long is an "extended period?"

For that answer, you might want to check this out-http://idosbaloans.blogspot.com/2010/06/when-will-fed-raise-rates.html

SBA 7(a) Weekly Lending Update

$1,023,395,000 in SBA 7(a) loans were approved last week by SBA.

A billion dollars in one week is an amazing pace. Clearly lenders and borrowers are sending in everything they can right now to take advantage of the increased guarantee and guarantee fee waiver.

So far this fiscal year, which began October 1st, SBA has approved $5,072,834,000 in SBA 7(a) loans.

SBA recently provided an information notice telling lenders that a loan has be approved by year end to take advantage of the increased guarantee and guarantee fee waiver.

504 debenture rate

SBA 504 Debenture Rate for December

The debenture rate is 3.72% but note rate is 3.77% and effective yield is only 5.571%.

Note that debenture fees have increased. The effective rate chart now includes the higher borrower fee, which is an additional 0.749%.

The SBA and dizen

dizen
(DY-zuhn, DIZ-uhn)
1. To attire with finery.
2. To dress or decorate in a gaudy manner.
From Old English dis- (a bunch of flax on a distaff for spinning).
‘Tis the season for dizen
_____________________________________________________

TIP OF THE WEEK

The increased guaranty and guaranty fee waiver for SBA 7(a) loans is scheduled to expire December 31, 2010.

SBA released an information notice indicating that most 7(a) loans should be submitted by December 15th.
________________________________________
Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate December 2010 = 3.27%
SBA Fixed Base Rate December 2010 = 5.77%
________________________________________________
504 Debenture Rate for November
The debenture rate is 3.25% but note rate is 3.30% and effective yield is only 5.102%.
________________________________________________
AHEAD OF THE YIELD CURVE

The Federal Reserve Open Market Committee meets tomorrow.

Last month when they met they said that interest rates would remain “exceptionally low” for “extended period.”

One of the reasons the Fed is keeping rates low is because of “low rates of resource utilization.” Keep your eyes and ears open for Wednesday’s release on capacity utilization. This is one of the Federal Reserve’s favorite measures of inflationary expectations. Back in September it had dropped for the first time in almost a year. Last month it was flat.

The Federal Reserve also said that it would buy $600 billion of U.S. government debt to spur job growth and avoid deflation.

The Fed said it will focus about 86 percent of its purchases in notes due in 2.5 years to 10 years. As a result, the 30 year Treasury bond has become the benchmark for the world’s biggest debt investors. The 30 year Treasury bond will also be the only government debt that most closely reflects market expectations for inflation and future growth.

Since the Fed’s November 3rd announcement about these debt purchases, the 30-year yield has risen about ¼ percentage point. The interest rate on the 30 year bond has risen about 100 percentage points from a 17-month low of 3.46 percent August 25th.

The 30-year bond yield was little changed at 4.39 percent Friday after dropping six basis points Thursday, when the $13 billion U.S. sale of the debt drew the highest demand since August. The yield increased to the seven-month high of 4.50 percent on December 8th, making it extremely attractive to Treasury bond investors. Back in April it was up to 4.77 percent.

The bond’s average yield was 4.49 percent from Dec. 31, 2007, through Sept. 12, 2008, just before the collapse of Lehman Brothers.

It is now at 4.44 percent.

Here is what the 30 year bond has been doing:
2001- 5.49
2002- 5.43
2003- ND
2004- ND
2005- ND
2006- 4.91
2007- 4.84
2008- 4.18
2009- 3.89
2010- 4.61

What a minute, why no numbers for 2003, 2004, and 2005?

One month after the 9/11 attacks, the Treasury 30 year bond is discontinued. When the Treasury mothballed the 30-year bond in 2001, experts speculated it was trying to drive down long-term interest rates, which had remained stubbornly high while the Federal Reserve was slashing short-term interest rates to revive the economy. When the Treasury discontinued the 30-year bond in 2001, its yield fell 35 basis points in one day. Why? A shrinking supply of the 30-year Treasury bond caused increased demand to drive rates down.

What does all this mean?

I don’t know.

Fed policy makers may signal tomorrow that they are open to boosting debt purchases beyond the $600 billion already announced.

It would appear that the savings from low variable rates of interest should continue for an "extended" period.
_________________________________________________
OFF BASE

There are exactly twelve days until Christmas. Does that mean the twelve days of Christmas start today?

Not quite. It’s not the twelve days before Christmas, but the twelve days after Christmas. It ends on January 6th on what is known as the Epiphany (with a big E) which celebrates when the three wise men came with gifts for the baby Jesus. This day was once as celebrated as Christmas.

If Christmas is almost here, that means the first day of winter is almost here. It is also the shortest day of the year. In ancient times, the winter solstice was observed with much more fervor than it is today. Centuries ago in some cultures, elaborate festivals were held. Alarmed by the colder weather, shorter days with less and less sunlight, and long, dark nights, some were convinced that they had done some terrible wrong and as punishment, the sun was leaving the sky never to return. Large bonfires were lit with rituals held pleading to whatever god they believed in to make the sun return. These solstice festivals evolved into Christmas as we now know it.


Is There a Santa Claus?
Is There a Santa Claus? was the title of an editorial appearing in the September 21, 1897 edition of the New York Sun. The editorial, which included the famous reply "Yes, Virginia, there is a Santa Claus", has become an indelible part of popular Christmas lore in the United States. Here is the editorial:
"DEAR EDITOR: I am 8 years old.
"Some of my little friends say there is no Santa Claus.
"Papa says, 'If you see it in THE SUN it's so.'
"Please tell me the truth; is there a Santa Claus?
"VIRGINIA O'HANLON.
"115 WEST NINETY-FIFTH STREET."

VIRGINIA,
your little friends are wrong. They have been affected by the skepticism of a skeptical age. They do not believe except [what] they see. They think that nothing can be which is not comprehensible by their little minds. All minds, Virginia, whether they be men's or children's, are little. In this great universe of ours man is a mere insect, an ant, in his intellect, as compared with the boundless world about him, as measured by the intelligence capable of grasping the whole of truth and knowledge.
Yes, VIRGINIA, there is a Santa Claus. He exists as certainly as love and generosity and devotion exist, and you know that they abound and give to your life its highest beauty and joy. Alas! how dreary would be the world if there were no Santa Claus. It would be as dreary as if there were no VIRGINIAS. There would be no childlike faith then, no poetry, no romance to make tolerable this existence. We should have no enjoyment, except in sense and sight. The eternal light with which childhood fills the world would be extinguished.
Not believe in Santa Claus! You might as well not believe in fairies! You might get your papa to hire men to watch in all the chimneys on Christmas Eve to catch Santa Claus, but even if they did not see Santa Claus coming down, what would that prove? Nobody sees Santa Claus, but that is no sign that there is no Santa Claus. The most real things in the world are those that neither children nor men can see. Did you ever see fairies dancing on the lawn? Of course not, but that's no proof that they are not there. Nobody can conceive or imagine all the wonders there are unseen and unseeable in the world.
You may tear apart the baby's rattle and see what makes the noise inside, but there is a veil covering the unseen world which not the strongest man, nor even the united strength of all the strongest men that ever lived, could tear apart. Only faith, fancy, poetry, love, romance, can push aside that curtain and view and picture the supernal beauty and glory beyond. Is it all real? Ah, VIRGINIA, in all this world there is nothing else real and abiding.
No Santa Claus! Thank God! he lives, and he lives forever. A thousand years from now, Virginia, nay, ten times ten thousand years from now, he will continue to make glad the heart of childhood.

SBA 7(a) Weekly Lending Update

Another $558,183,000 in SBA 7(a) loans were approved last week.

That brings the total to $4,049,439,000 in SBA 7(a) loans so far this fiscal year, which began October 1st. That's almost FOUR times the volume two years ago.

Borrowers and lenders are rushing to get in as many deals as they can by the end of the year when the increased guarantee and guarantee fee waiver end.

SBA 7(a) Rate Update

Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate December 2010 = 3.27%
SBA Fixed Base Rate December 2010 = 5.77%
Lenders can charge up to 2.75% over these indices.

SBA 7(a) Weekly Lending Update

Another $364,611,000 in SBA 7(a) loans were approved last week despite Thanksgiving. That brings the year to date total for the SBA 7(a) loan program to $3,491,256,000.

Demand for SBA 7(a) loans remains high due to the lack of credit elsewhere, the increased guarantee percentage and the SBA guarantee fee waiver.