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.
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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.

The SBA and oniomania

oniomania

(O-nee-uh-MAY-nee-uh, -MAYN-yuh)

Compulsive shopping; excessive, uncontrollable desire to buy things.

From Latin, from Greek xnios (for sale), from onos (price) + -mania.

Oniomania is another word for the urge to shop till you drop and the thrill of the bill. According to a pearl of ancient wisdom, we don't acquire things, things acquire us. In the case of oniomaniacs, it is perhaps the fun of acquiring things that acquires them.
_____________________________________________________
TIP OF THE WEEK
Oniomania has not yet returned to commercial real estate but it appears that the market might be starting to rebound.

Last week, Moody’s Investors Service said U.S. commercial property prices rose 4.3 percent in September from the previous month, the biggest gain in a decade of records.

The Moody’s/REAL Commercial Property Price Index climbed 0.3 percent from a year earlier as a small number of high-priced deals drove up values. The measure had fallen to an eight-year low in August.

The Moody’s/REAL index is still 43 percent below its October 2007 peak. The gauge 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. It is possible that commercial real prices have bottomed - in general - but it is hard to tell because the number of transactions still is very low and there are a number of distressed sales.

If you would like a copy of this Moody's report, let me know.

Keep in mind that the fee waiver for SBA borrowers only have 32 days left.
________________________________________
Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate November 2010 = 3.25%
SBA Fixed Base Rate November 2010 = 5.32%
________________________________________________

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

Oniomania might be helping the economy.

Payrolls climbed 151,000 last month following a revised 41,000 drop the prior month. The September figure was revised from an initially reported decline of 95,000.

Leading the pack were retailers who took on 27,900 workers as they prepared for the holiday shopping season.

Consumer spending accounts for about 70 percent of U.S. gross domestic product.

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

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

October 151,000

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.

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

In the meantime, get out there and buy something.
_________________________________________________
OFF BASE

Oniomania is often triggered by a limited time offer.

For example, the McRib, McDonald’s miracle of a processed pork BBQ sandwich, is available only through this weekend.

SBA 7(a) Weekly Lending Update

Wow! SBA loan volume has exploded. Last week $509,303,000 in SBA 7(a) loans were approved, bringing the year to date total to $3,126,645,000.

Over the same period last year $2,268,868,000 in SBA 7(a) loans were approved and the year before that only $1,042,0914,000 in loans had been approved.

Obviously the increased guarantee and the guarantee fee waiver are working.

Big changes for SBA loans

Recent legislation has increased the maximum SBA loan amounts up to $5,000,000 for the SBA 7(a) loan program and the SBA 504 loan program.

The SBA 7(a) program can be used for a broad variety of purposes such as real estate purchase, debt refinance, equipment purchase, business acquisition and working capital. A bank lends the borrower the money, and the SBA guarantees a portion of the loan.

Rates on a SBA 7(a) loan are a variable rate usually tied to prime and adjusting on a quarterly basis.

The term of the SBA 7(a) loan is based upon the use of proceeds as follows:
Real estate purchase or real estate debt refinance- 25 years
Debt refinance- 10 years
Equipment purchase- 10 years
Working capital- 10 years


The SBA 504 program is for real estate purchase or construction. A 504 loan consists of a conventional bank first trust deed and a SBA debenture in second trust deed position. Rates on a 504 loan are fixed.

The typical 504 structure is usually:
Down payment- 10%
Bank 1st- 50%
504 2nd- 40%

With the debenture now going up to $5,000,000, a SBA 504 loan could conceivably finance a real estate deal up to $12,500,000.

Not only has the loan amounts increased, so has the SBA definition of a small business. Now for both the 504 and 7(a) loan programs, SBA defines a small business as one where the net worth of the company does not exceed $15,000,000 and the net profits of the company are less than $5,000,000 averaged over the last two years.

This increase in loan size and the definition of a small business may very well keep small business afloat during the coming tidal wave of commercial real estate debt that is coming due.

Most commercial estate real loans are not fully amortized. They typically have a balloon come due in five years. As commercial estate declines in value, many borrowers are unable to refinance their commercial estate loan since the loan to value is now too high.

Any commercial real estate loan with a balloon is eligible for refinance with a SBA loan. The owner of the property just needs to also be the owner of the business occupying the building.

The primary qualifying criteria is not loan to value but cash flow. As long as the business can generate sufficient cash flow to repay the loan, it is a viable candidate. Business cash flow in the SBA lending world is typically defined as net profits plus depreciation plus rent (if rent is paid to the owner).

The fully amortizing nature of SBA loans makes them one less thing for borrowers to worry about.

504 debenture rate

SBA 504 Debenture Rate for November

The debenture rate is 3.25% but note rate is 3.30% and effective yield is only 5.102%.

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

SBA 7(a) Rate Update

Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate November 2010 = 3.25%
SBA Fixed Base Rate October 2010 = 5.32%

Lenders can charge up to 2.75% over these indices.

SBA 7(a) Weekly Lending Update

Another $327,346,000 in SBA 7(a) loans were approved last week, bringing the year to date total to $2,617,342,000.

Demand for SBA 7(a) loans remains strong as a result of the increased guaranty, guaranty fee waiver, the attractive low rate, and the lack of other lending options.

The SBA and vitiate

vitiate
(VISH-ee-ayt)
1. To impair or spoil the effectiveness of.
2. To corrupt.
From Latin vitiare (to spoil, injure), from vitium (blemish). Earliest recorded use: 1534.
_____________________________________________________
TIP OF THE WEEK

The vitiation of SBA loans is imminent.

There are only 46 days left until the 90 percent guaranty and fee waiver for SBA 7(a) loans end.

There is an SBA public meeting this week on the use of 504 loans for debt refinance from which the SBA wants comments. They will then develop proposed regulations which will then be published for a 30-day public comment period from which the SBA will then write final regulations which will then be published with a stated future effective date.
_________________________________________
Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate October 2010 = 3.26%
SBA Fixed Base Rate October 2010 = 5.36%
________________________________________________

504 Debenture Rate for October
The debenture rate is 3.11% but note rate is 3.16% and effective yield is only 4.521%.
________________________________________________
AHEAD OF THE YIELD CURVE

Are you worried about inflation?

The Federal Reserve isn’t.

At their last meeting on monetary policy they said “…measures of underlying inflation have trended lower in recent quarters.”

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.

In September, the capacity utilization rate slipped down to 74.7 percent.

Keep your eye on Tuesday’s report from the Federal Reserve on Industrial Production and Capacity Utilization for the month of October.

It just might slip again. Last week, according to a new report released by Ceridian-UCLA their index of up-to-the-minute diesel fuel purchases by commercial trucks fell 0.6% in October after declining 0.5% in September. Diesel purchases have come to be a good proxy for the state of commerce across the country. An increase in sales means more goods are being trucked and fewer diesel purchases suggest commerce is slowing.

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





What does all this mean?


I don’t know.


Capacity utilization at 74.7% is still far below normal - and well below the pre-recession levels of 81.2% in November 2007.


As the Federal Reserve keeps telling us, interest rates will be at exceptionally low levels for an extended period.
_________________________________________________
OFF BASE

I always thought the Friday after Thanksgiving kicked off the holiday shopping season and was the biggest shopping day of the year.

It is also the day I am supposed to start on the Christmas lights and all the decorations.

According to the 44,000 member International Council of Shopping centers, the day after Thanksgiving is not the hottest shopping day. The records of the Council say the busiest day is the Saturday before Christmas as last-minute shoppers hit the stores. They figure that the day after Thanksgiving ranks fifth.

It turns out the Friday after Thanksgiving is also Native American Heritage Day. Last year Congress passed the Native American Heritage Day Act of 2009 which establishes that the Friday after Thanksgiving is to “to honor the achievements and contributions of Native Americans to the United States, and for other purposes.”

The Friday after Thanksgiving might be the closest we get to a college football playoff. Three of the four top teams in the country play that day. The top ranked team in the country, Oregon plays Arizona. The second top team in the country, Auburn, plays last year’s champion Alabama.

And the best team in the country, Boise State, plays Nevada. Boise State has won 23 games in a row, the longest winning streak in the country.

Nevada has a legitimate shot at an upset mainly because the game isn't being played on the blue carpet in Idaho. Instead it's in Reno. Nevada proved in its 52-31 victory over Cal that it can take care of a decent Pac-10 team. No one else has scored as many points against Boise State as Nevada has over the past three years—135 to be exact. Nevada lost all three games by a narrow combined margin of only 20 points.

The secret to Nevada is their pistol offense. In the pistol offense, the quarterback lines up four yards behind the center rather than seven yards, as with the shotgun formation. The running back lines up three yards directly behind the quarterback, as opposed to next to him as in the shotgun. Using the Pistol Offense last season, the Nevada Wolf Pack led the nation in rushing at 345 yards a game. The Wolf Pack also became the first team in college football history with three 1,000-yard rushers in the same season.

UCLA attempted to adopt the pistol offense this season but you need a quarterback who can throw and run. UCLA also plays on the Friday after Thanksgiving against Arizona State.

I guess the Christmas lights are going to have to wait that day.

The SBA and ending the recession ONE LOAN AT A TIME

Here is a neat story about someone we helped:

http://jan.ocregister.com/2010/11/13/o-c-manufacturer-enjoys-turnaround/49286/

They obtained a SBA 7(a) loan.

SBA 7(a) Weekly Lending Update

Another $366,966,000 in SBA 7(a) loans were approved last week. The total so far for this fiscal year is $2,289,996,000. The fiscal year began October 1st.

This is a significant increase over last year when over the same period $1,383,738,000 in SBA 7(a) loans had been approved. The year before that only $750,228,000 in SBA 7(a) loans had been approved.

Obviously the Recovery Act enhancements of the 90 percent guaranty and the fee waiver are working. Interestingly the average SBA 7(a) loan amount has been $348,100. Last year it was $239,610 while the year before it was $199,600.

Businesses can take advantage of the no fees, low variable rates currently offered with the SBA 7(a) loan program.

That's something to be optimistic about (see the below post).

Small-Business Index in U.S. Rises to Highest in Five Months

From Bloomberg:
Confidence among U.S. small businesses rose in October to the highest level in five months as more companies projected sales gains and an improving economy according to The National Federation of Independent Business’s optimism index.

For more of this go to: http://noir.bloomberg.com/apps/news?pid=20603037&sid=a1DC5_Vl5FYA

Ahead of the Yield Curve

Retailers appear to have cut down on shipments to avoid excess holiday inventories, an action that has sapped some of the strength from the economy, according to a new report released by Ceridian-UCLA Tuesday.

The Ceridian-UCLA Pulse of Commerce Index tracks up-to-the-minute diesel fuel purchases by commercial trucks.

Diesel purchases have come to be a good proxy for the state of commerce across the country. An increase in sales means more goods are being trucked and fewer diesel purchases suggest commerce is slowing.

Nationwide, the index fell 0.6% in October after declining 0.5% in September and 1% in August. That was the first three-month drop since January 2009, at the height of the recession.

This is usually a leading indicator of the Fed's report on capacity utilization which is also due out soon.

Based upon this information, it would seem that the savings from a low variable rate with a SBA 7(a) loan should persist for some time.

For more go here: http://www.ceridianindex.com/

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

The Federal Open Market Committee said yesterday 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

The 90 percent guaranty and guaranty fee waiver for SBA 7(a) loans is obviously working.

So far this fiscal year (it started October 1st) $1,923,050,000 in SBA 7(a) loans have been approved.

That is a $368,060,000 increase over the last week.

The SBA and dibs

dibs

(dibz)

The right or claim on something.

The origin of this term is unclear. Some think it came from shortening of dibstones, a children's game played with pebbles. The 1967 edition of "Dictionary of American Slang" states that the word "dibs" comes from the verb to divvy.
_____________________________________________________
TIP OF THE WEEK

There are only 60 days left until the 90 percent guaranty and guaranty fee waiver expire for SBA 7(a) loans.

Currently the 7(a) loan program has dibs on debt refinance.

If you have maturing debt on owner-user real estate, a SBA 7(a) guaranteed loan can be used to refinance that debt.

Based upon feedback from SBA at the NAGGL conference, the use of 504 loans for debt refinance won't happen for awhile.

With a SBA 7(a) loan, not only can borrowers potentially save up to $166,250 in SBA guarantee fees, they will benefit from a loan that is fully amortized and have a rate of interest that will be "exceptionally" low for an “extended” period of time.
_________________________________________
Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate October 2010 = 3.26%
SBA Fixed Base Rate October 2010 = 5.36%
________________________________________________

504 Debenture Rate for October
The debenture rate is 3.11% but note rate is 3.16% and effective yield is only 4.521%.
________________________________________________
AHEAD OF THE YIELD CURVE

The Federal Reserve Open Market Committee meets this week.

Will they continue to say that they will keep interest rates “exceptionally low” for an “extended period?”

The Fed has repeated the “extended period” language at each meeting since March 2009, well over a year ago.

One of their reasons is because, as they put it, “employers remain reluctant to add to payrolls”.

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

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

September (95,000)
August (57,000)
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?

This extended period of low interest rates will last until the economy begins to demonstrate sustainable improvement in job creation.

In September, employers fired 95,000 workers after a revised 57,000 decrease in August. Most of the job losses actually came from the government as census workers and other government employees were let go. Private payrolls that exclude government agencies climbed 64,000 in September. Companies hired 93,000 workers in August and 117,000 in July.

Things are slowly, too slowly, actually getting better.

In the meantime, interest rates should remain exceptionally low for an extended period.


_________________________________________________
OFF BASE

Happy Birthday Will Rogers.

Thursday is Will Roger’s birthday. Known for his famous quote "I have never yet met a man that I didn't like," he was more than a funny cowboy. During the depths of the Great Depression, angered by Washington's inability to feed the people, Will Rogers embarked on a cross country fund raising tour for the Red Cross.

Tomorrow as you vote, you might want to keep some of his wit and wisdom in mind:

"Everything is changing. People are taking the comedians seriously and the politicians as a joke."

"Our foreign policy is an open book - a checkbook."


"Lettin' the cat out of the bag is a lot easier than puttin' it back in."

"People who fly into a rage always make a bad landing."

“Be thankful we're not getting all the government we're paying for.”

“Diplomacy is the art of saying 'Nice doggie' until you can find a rock.”

"Even if you are on the right track, you'll get run over if you just sit there."

Most of this stuff he said 75 years ago.

Vote.

SBA 7(a) Weekly Lending Update

So far this new fiscal year $1,554,986,000 in SBA 7(a) loans have been approved.

This is an increase of $373,840,000 over the prior week.

For the fiscal year ending September 30th, $12,630,559,000 in SBA 7(a) loans were approved.

For the fiscal year ending September 30th, 2009, $9,286,218,000 in SBA 7(a) loans have been approved.

The SBA 7(a) loan program had been approving just over $14 billion back in 2006 and 2007.

Changes to the SBA 7(a) loan program

For a summary of the changes to the SBA 7(a) loan program, go here

http://www.sba.gov/idc/groups/public/documents/sba_program_office/bank_5000-1182.pdf

SBA 7(a) Weekly Lending Update

Over a billion dollars in SBA 7(a) loans were approved last week. A billion dollars! $1,171,902,000 to be exact.

For the week ending October 15th, 3,236 loans totaling $1,171,902,000 were approved by the SBA.

The increase can be obviously attributed to the Recovery Act enhancements of the 90 percent guarantee and guarantee fee waiver.

The SBA and self storage- Acquisitions

SBA financial assistance is available to acquire existing self storage facilities.

Down payment requirements will vary depending on the financial performance of the facility to be acquired and the financial strength of the buyer. In most cases, buyers should be prepared to put 15 percent down. The down payment should not come from a borrowed source.

The historical cash flow of the facility will be based upon tax returns.

The seller of the facility is required to sell his entire interest. He can not retain any ownership interest.

The SBA and gallimaufry

gallimaufry
(gal-uh-MAW-free)
A hodgepodge; a jumble.
From Middle French galimafree (stew), probably from galer (to make merry) + mafrer (to gorge oneself).
_____________________________________________________
TIP OF THE WEEK

Lost in the gallimaufry of SBA news is the fact that there are only 73 days left until the 90 percent guarantee and SBA guarantee fee waiver once again expire.

SBA 7(a) loans up to $5,000,000 are especially attractive to both lenders and borrowers right now to refinance any owner-user real estate debt that has a balloon.

Not only can borrowers potentially save up to $166,250 in SBA guarantee fees, they will benefit from a loan that is fully amortized and have a rate of interest that will be "extraordinarily" low for an “extended” period of time.
_________________________________________
Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate October 2010 = 3.26%
SBA Fixed Base Rate October 2010 = 5.36%
________________________________________________

504 Debenture Rate for October
The debenture rate is 3.11% but note rate is 3.16% and effective yield is only 4.521%.
________________________________________________
AHEAD OF THE YIELD CURVE

The yield curve is getting steeper.

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 while a flat curve indicates weak growth, and conversely, a steep curve indicates strong growth.

The yield on the 30-year bond touched a one-month high as the Treasury sold $13 billion of the bonds to pay for all the wonderful things the government is doing to us. This came a day after the Treasury had sold $21 billion of 10 year bonds. The extra yield that investors demand for 30-year bonds compared with 10-year debt touched a record high 1.46 percentage points Friday. The five-year average is a 0.52 percentage point difference.

The 30 year bond closed Friday at 3.99 percent. The securities drew yields of 3.954 percent in August and 3.82 percent in September.

Does this mean things are getting better and rates will really start to go up?

Not necessarily. The yield on the 30-year bond is rising because traders are betting that the Fed will purchase SHORTER-term U.S. notes in a strategy called quantitative easing. Fed Chairman Ben Bernanke said in a speech last week that additional stimulus may be warranted because inflation is too low and unemployment too high.

The futures market also doesn’t think rates are going to go up.

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:

DEC10- 0.35

DEC11- 0.61

DEC12- 1.15

DEC13- 1.90

DEC14- 2.75

DEC15- 3.48

DEC16- 3.98

DEC17- 4.18

DEC18- 4.26


What does all this mean?


It would appear that the savings from lower variable rates of interest should persist. In their last policy notice, the Federal Reserve said rates would remain "extraordinarily" low for an “extended” period.


_________________________________________________
OFF BASE

There is a gallimaufry of polls about who the best team in college football is.

You have the Associated Press poll, the USA Today college football coaches’ poll, and the Harris Interactive poll.

The AP Top 25 College Poll is compiled from votes by 65 sportswriters and broadcasters from across the country.

The USA Today Coaches' Poll is compiled by the USA Today Board of Coaches which is made up of 59 head football coaches.

The Harris Interactive College Football Poll is a weekly ranking compiled by Harris Interactive, a market research company that specializes in Internet research. The Harris Interactive Poll is composed of former players, coaches, administrators, and current and former media who submit votes.

The University of Oregon Ducks is No. 1 in all the polls, but rated eighth in the computer rankings. EIGHTH!

Computer rankings?

Six different computer programs, run by six different people, also rank the best teams. Every week, the six systems input scores, let the computers spit out the rankings and send them to the BCS. That’s it. Nobody at the BCS double-checks the rankings. Only one of the six, Wes Colley, makes his formula fully public.

For each team, the BCS drops the highest and lowest computer ranking to get rid of potential outliers, adds the four remaining numbers, divides them by a hundred to get a percentage, and averages that percentage with the one from the coaches’ poll and Harris Poll. The BCS no longer uses the AP poll.

As a result, Oregon is number two in the BCS standings which just came out for the first time this season.

Oregon plays UCLA Thursday night. The Bruins are 22 point underdogs.

The SBA and self storage- Refinance

The SBA 7(a) loan program can be used to refinance debt on a self storage facility.

The debt must qualify under SBA eligibility criteria.

That means that the original use of the proceeds of the debt to be refinanced must have been for an eligible purpose. Examples of eligible purposes include construction, acquisition and debt refinance. If the debt had been used for a cash distribution to the owners, it may not qualify.

The debt to be refinanced must also be on what the SBA calls "unreasonable" terms. Loans not fully amortized, meaning they have a balloon, are considered unreasonable by SBA.

Applicant's Personal Liquidity

Both SBA 7(a) loan and 504 loan applicants are subject to what is called the "Personal Resources Test."

Does applicant personally have cash that can be used in the lieu of the loan?

If the total financing package:
(1) Is $250,000 or less, the exemption is two times the total financing package or $100,000, whichever is greater;
(2) Is between $250,001 and $500,000, the exemption is one and one-half times the total financing package or $500,000, whichever is greater; or
(3) Exceeds $500,000, the exemption is one times the total financing package or $750,000, whichever is greater.

Total financing package is the total project cost. It typically is the sum of the loan amount and borrower's injection.

7(a) Rate Update

Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate October 2010 = 3.26%
SBA Fixed Base Rate October 2010 = 5.36%
Rates can go up to 2.75% over these indices.

504 debenture rate

SBA 504 Debenture Rate for October

The debenture rate is 3.11% but note rate is 3.16% and effective yield is only 4.521%.

Note that debenture fees are increasing. The effective rate chart is based on loans that were actually funded in the October debenture sale. Since there were no loans in the sale that were processed at the higher borrower fee, no rate information is available yet that reflects the new fee. Look for a loan that was processed, closed & funded at the 0.749% fee sometime in November or December.

The SBA and self-storage

If you are trying to figure out where it says SBA loans are now eligible for self-storage or mini-warehouses, you won’t find it.

Sometimes it is not what SBA says, but what they don’t say.

The old SOP (Standard Operating Procedure) used to include this language

“Mini-warehouses, office suites, shopping centers, flea markets, and mobile home parks, are not eligible unless they provide sufficient services. Sufficient services shall be deemed to exist when more than 50% of the business’s revenue for the prior year is derived from the services provided rather than from rental income.”


With the release of the new SOP on October 1st, 2010, that paragraph was deleted.

The deletion was deliberate and represents a change in thinking by the small business administration.

SBA Implements Larger Loan limits Established Under Jobs Bill

SBA has just announced that they have implemented the larger loan limits established under the jobs bill.

Those limits are $5,000,000 for the SBA 7(a) program and $5,000,000 for a 504 debenture.

The press release from SBA will be posted here

http://www.sba.gov/news/

7(a) Rate Update

Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate October 2010 = 3.26%
SBA Fixed Base Rate October 2010 = 5.36%

Rates can go up to 2.75% over these indices.

SBA 7(a) Weekly Lending Update

The 90 percent guaranty made a difference.

According to SBA, all of the loan applications placed in the U.S. Small Business Administration’s loan queue by small business borrowers have received final approval. The approvals, which were completed Monday, amount to 1,939 loans for nearly $970 million.

For a copy of the press release from SBA, go here-
http://www.sba.gov/idc/groups/public/documents/sba_homepage/news_release_10-57.pdf

There are only 86 days left until the increased guaranty fee and fee expires.

The SBA and precatory

precatory
(PREK-uh-tor-ee)
1. Expressing a request.
2. Nonbinding: only expressing a wish or giving a suggestion.
From Latin precari (to pray).
_____________________________________________________
TIP OF THE WEEK

New legislation on SBA loans appears to be precatory at this point.

So far the SBA has provided policy guidance allowing

-Waiver of SBA loan fees for SBA 7(a) and 504 loans through December 31, 2010
-a 90 percent guaranty through December 31, 2010
-A new definition of a small business to be a company with net profits less than $5,000,000.

SBA still needs time to implement policies that will

-increase the maximum SBA 7(a) loan amount to $5,000,000
-increase the maximum 504 debenture amount to $5,000,000
-allow 504 loans to be used for the refinance of commercial real loans for the next two years

________________________________________________________________

The first two loan pools under the new SBA First Mortgage Loan Pool Program sold last week.
This is for loans where the debenture funded after February of 2009.
The intent was to stimulate the secondary market for 504 1st trust deeds.
In addition to pool eligible loans, interest appears to be increasing for non-performing and sub-performing 504 1st trust deeds for hospitality.
_________________________________________
Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate September 2010 = 3.26%
SBA Fixed Base Rate September 2010 = 5.36%
________________________________________________

504 Debenture Rate for September
The debenture rate is 3.21% but note rate is 3.26% and effective yield is only 4.622%.
________________________________________________
AHEAD OF THE YIELD CURVE

The two-year U.S. Treasury note yield fell to a record low of 0.403 percent this morning. The 30-year T-bond rose almost a full point in price to yield 3.676 percent, down 4 bps.

The bond market is telling us that the Federal Reserve intends to keep interest rates low as they put it two weeks ago at their last meeting “for an extended period.”



This extended period will last until the economy begins to demonstrate sustainable improvement in job creation.

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

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

August (54,000)
July (54,000)
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?

Overall employment, including government agencies, fell 54,000 for a second month. The decrease reflected a 114,000 drop in temporary workers hired by the government to conduct the 2010 census. Private payrolls climbed 67,000 after a revised 107,000 increase in July that was more than initially estimated.

Things are slowly, too slowly, actually getting better.
In the meantime, interest rates should remain exceptionally low for an extended period.
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OFF BASE

Pitching always beats batting — and vice-versa.”
-Yogi Berra

The Giants, who have baseball's best pitching staff, are in the playoffs. The Kansas City Royals, the second-best hitting team in the majors, finished last in the American League.

Over the last five seasons, the team that has led the majors in pitching has advanced into the postseason four times. Over that same span, the team that led the majors in home runs was only half as successful.

Five of the last eight World Series teams finished in the top four in their respective leagues in earned-run average. During that same period, none of the majors' top-hitting teams made it that far. And one, the 2008 Texas Rangers, didn't even have a winning record.

This season, no team has been better at keeping things simple than the Giants, who have a 3.38 ERA, the best mark in the majors in seven seasons. They were even better down the stretch, posting a 1.78 ERA in September, the fifth-best mark by any team in any month in the last 90 years. The Giants played 18 games in which no opponent scored more than three runs in a game. No team has done that since the dead-ball era.

Dead ball era by the way was that time in baseball before Babe Ruth started hitting it out.

The Angel’s Brandon Wood finished his season with his own dead-ball era. His batting average ended up at only .146.

Wood joins Ray Oyler as only the second player since 1920 to hit below .150 while getting 200-plus at-bats.

Perhaps the greatest example of the old baseball cliché “good field, no hit,” Ray Oyler was the regular shortstop for the Detroit Tigers in the late 1960’s.

Unable to even hit his weight, Oyler was nicknamed the “woodless wonder." He famously went "0 for August," in the summer of 1968. Tiger’s manager Mayo Smith made one of the boldest and most talked-about managerial moves in baseball history, moving the centerfielder who had never played shortstop to Oyler’s position for the last 9 games of the regular season and for all 7 games of the 1968 World Series.

The next season Oyler played for the new Seattle Pilots. Seattle fans, feeling Oyler was the Pilot most needy of support, organized the "Ray Oyler Fan Club" in spring training.

Oyler almost ruined it by homering to win the Pilots' first home game in the bottom of the ninth inning.