SBA loans are good for the economy

SBA 7(a) loan approvals totaled $361,478,000 for the week ending June 21^st.  

That’s two solid weeks of SBA 7(a) loan volume that puts us on pace to beat the 1^st quarter of 2013.

This bodes well for economic growth moving forward.

Remember, SBA 7(a) loan volume is a leading economic indicator as the correlation coefficient between SBA 7(a) loan volume and GDP is a statistically significant 0.86.

SBA Loans Are Good for the Economy

SBA 7(a) loan approvals totaled $362,297,000 for the week ending June 14^th.  

This is a nice little jump from the prior week when SBA approved $300,328,000 in SBA 7(a) loans.

SBA 7(a) loan volume is a leading economic indicator as the correlation coefficient between SBA 7(a) loan volume and GDP is a statistically significant 0.86.

The SBA and temerarious

temerarious

tem-uh-RAR-ee-uhs

Presumptuously or recklessly daring or bold.

From Latin temere (rashly).

_______________________________________________

TIP OF THE WEEK 

The SBA might be getting a little temerarious.

A draft of its Standard Operating Procedures will be released soon. 

Significant changes to personal liquidity, affiliations and collateral requirements have already been announced.

This new SOP will take effect October 1, 2013.

_____________________________________

Indices:

PRIME RATE= 3.25%
SBA LIBOR Base Rate June 2013 = 3.19%
SBA Fixed Base Rate June 2013 = 4.96%
________________________________________

Debenture Rate for June    

The debenture rate is 2.45% but note rate is 2.49% and effective yield is only 4.529%.

 ________________________________________________

AHEAD OF THE YIELD CURVE 

The Federal Reserve meets this week and they won’t be temerarious.

The unemployment rate is at 7.6% and inflation is falling.

Inflation is falling?   

Tuesday the consumer price index will be released for the month of May.  Last month, Consumer prices climbed 1.1 percent in the 12 months through April, according to a measure watched by the Fed that excludes food and fuel -- matching the smallest increase since records began in 1960. That’s down from 1.9 percent in the year ended April 2012.

On Friday it was reported that capacity utilization for total industry edged down 0.1 percentage point to 77.6 percent.  This is the second consecutive monthly decline.  The capacity utilization rate, which measures how much plants and factories are being used, is one of the Federal Reserve’s favorite gauges of the economy.  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.

Despite all this, last week’s Treasury auction of $13 billion in 30 year bonds went off at a yield of 3.355 percent, the highest since March 2012.    

What a difference a month makes.   At May’s sale of 30 year bonds, the yield was only 2.98%, the lowest yield since December.

30-year bonds are among the securities most sensitive to consumer prices because of their long maturity, as inflation would erode the return on the bonds’ fixed payments for their duration.

Over the past month, the yield curve has moved up, getting somewhat steeper in the process, as long rates moved more than short rates. 

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.

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

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

2011- 2.89

2012- 2.77
2013-  3.25

Wait 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. 

It will be interesting to hear what the Federal Open Market Committee has to say.

It would appear that interest rates are going to remain the same, go up, or go down.

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OFF BASE

Juan Pierre’s temerarious ways on the base paths are not hurting the Marlins.   They are hurting themselves. 

They are on pace for a 47-115 season, a level of losing topped only twice in the last 70 years.  With a little bit of luck, they just might beat the Mets’ record for futility of 120 losses.

Speaking of luck, almost half of their losses are by one or two runs in extra innings — none worse than a recent 11-inning game at the Philadelphia Phillies in which John Mayberry erased a Miami lead with a 10th-inning homer and then won it with a grand slam.

The Marlins manufactured the go-ahead run in the 10th inning on the speed of Juan Pierre, who drew a leadoff walk. Pierre fell behind two strikes in the count, but he capped the nine-pitch showdown with a walk. He advanced to second on a sacrifice bunt, and then stole third.  Juan then dashed home with the decisive run on a wild-pitch on a 2-2 slider that bounced away from the catcher.

The lead was short lived as Mayberry belted the game-tying home run in the 10^th followed by his grand slam an inning later.

Juan is now 18^th on the all-time stolen base list and 6^th on the all-time caught stealing bases list.   He now has more stolen bases than anyone else playing baseball right now.

It might be a long summer for Juan and the Marlins. 

The first day of summer is Friday, June 21^st.

SBA 504 loan debenture rate for June

SBA 504 loan Debenture Rate for June 

The debenture rate is 2.45% but note rate is 2.49% and effective yield is only 4.529%.

SBA loans are good for the economy

The first week of June got off to a good start as the SBA approved $300,328,00 in SBA 7(a) loans for the week ending June 7th.  

That's a slight bump over last week when $291,446,000 in SBA 7(a) loans were approved.  

SBA 7(a) loan volume is a leading economic indicator as the correlation coefficient between SBA 7(a) loan volume and GDP is a statistically significant 0.86.

SBA 7(a) Rate Update

Indices:

PRIME RATE= 3.25%
SBA LIBOR Base Rate June 2013 = 3.19%
SBA Fixed Base Rate June 2013 = 4.96%

Lenders can charge up to 2.75% over these indices.

SBA loans are good for the economy

$291,446,000 in SBA 7(a) loans were approved for the week ending May 31^st.

For the one month period ending May 31^st, SBA 7(a) loan approvals totaled $1,484,588.

This compares favorably to the month of April, when $1,353,386,000 in SBA 7(a) loans were approved.

This puts us on pace to beat the 1^st quarter of 2013 when SBA 7(a) loan approvals totaled $4,049,146,000.

SBA 7(a) loan volume is a leading economic indicator as the correlation coefficient between SBA 7(a) loan volume and GDP is a statistically significant 0.86.

The SBA and nihilarian

nihilarian

nih-i-LAR-ee-uhn 

One who does useless work.

From Latin nihil (nothing).

_______________________________________________

TIP OF THE WEEK 

SBA lenders are not nihilarians.   

SBA 7(a) loans account for most long term loans made to small businesses.   

When comparing SBA term loans with bank CALL report term loans, SBA loans account for as much as 70% of all long term loans made to small businesses.  

The correlation of SBA 7(a) loan approvals with our nation's economic performance is strong.

Just for fun I calculated the correlation coefficient between SBA 7(a) loan volume and GDP for over six years using the Microsoft CORREL function. 

It came out to a statistically significant 0.86. 

SBA lending is now up over 20% from last year!

_____________________________________

Indices:

PRIME RATE= 3.25%
SBA LIBOR Base Rate May 2013 = 3.20%
SBA Fixed Base Rate May 2013 = 4.52%

________________________________________

Debenture Rate for May   

The debenture rate is 2.07% but note rate is 2.107% and effective yield is only 4.15%.

 ________________________________________________

AHEAD OF THE YIELD CURVE 

I don’t think we can call the Federal Reserve a bunch of nihilarians.

Federal Reserve Bank of New York researchers forecast the U.S. unemployment rate will decline in the fourth quarter of 2014 to the central bank’s threshold for considering an increase in the benchmark interest rate.  The Federal Open Market Committee in December specified 6.5 percent as the level for the jobless rate that would prompt consideration of raising the Fed’s target rate, which has been near zero since December 2008.  Prior to specifying the unemployment threshold, the FOMC said the rate would be near zero through mid-2015.

According to the U.S. Bureau of Labor Statistics, the unemployment rate is at 7.5 percent.

Keep your eyes and ears open for Friday’s report on jobs for May.  

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

April 165,000

March 88,000

February 332,000

January 148,000

2012

December 155,000

November 161,000

October 137,000

September 114,000

August 142,000

July 181,000

June 45,000

May 77,000

April 68,000

March 143,000

February 240,000

January 243,000

2011

December 203,000

November 157,000

October 112,000

September 158,000

August 104,000

July 127,000

June 20,000

May 25,000

April 232,000

March 194,000

February 235,000

January 68,000

2010

December 121,000

November 93,000

October 210,000

September (41,000)

August (1,000)

July (66,000)

June (175,000)

May 431,000

April 218,000

March 230,000

February (36,000)

January (26,000)

2009

December (150,000)

November (11,000)

October (111,000)

September (215,000)

August (201,000)

July (304,000)

June (443,000)

May (322,000)

April (504,000)

March (699,000)

February (651,000)

January (655,000)

2008

December (681,000)

November (597,000)

October (423,000)

September (403,000)

August (127,000)

July (67,000)

June (100,000)

May (47,000)

April (67,000)

March (88,000)

February- (83,000)

January- (76,000)

What does all this mean?

I don’t know.

The U.S. still employs more than 2.5 million fewer people than when the recession began. At 180,000 jobs a month, it will take until the middle of 2014 to close that gap.

Private employment is up 2.166 million over the last year, and up 813 thousand so far in 2013 (a 2.44 million annual pace).  U.S. employers have added an average of 195,750 jobs each month this year, compared with 180,333 during the last half of 2012, based on figures from the Labor Department.   This average is skewed somewhat by the spike in numbers for February.  

It would appear that interest rates are going to remain the same, go up, or go down.

__________________________________________
OFF BASE

Are base stealers the nihilarians of baseball?  Especially when they get caught?

Right now, Juan Pierre has been caught 200 times stealing bases.  That’s more than anyone else playing baseball right now.  It’s number six in all of baseball history.

Juan just passed Bert Campaneris on the all-time caught stealing base record.  

Campy is probably best remembered for his antics in the 1972 American League Championship Series.  In game 2, Campaneris already had three hits, two steals and two runs when in the 7th inning he faced pitcher Lerrin LaGrow.  LaGrow's first pitch hit Campaneris in the ankle. Campaneris staggered for a moment, glared at LaGrow and then flung his bat toward LaGrow. The bat spiraled at LaGrow five feet off the ground, but LaGrow ducked, and the bat narrowly missed LaGrow, landing a few feet behind the mound.

   

If you feel like a nihilarian, just remember what John Wooden once said, “Don’t mistake activity for achievement.”

SBA loans are good for the economy

SBA 7(a) loan volume continues to pick up the pace as another $378,585,000 in SBA 7(a) loans were approved for the one week ending May 24^th.  That's a nice pick up from last week's pace of just over $299,139,000.

If you think the economy might be gathering some steam right now, you might be right.  Keep in mind that the correlation of SBA 7(a) loan approvals with our nation's economic performance appears to be quite strong.  Just for fun I calculated the correlation coefficient between SBA 7(a) loan volume and GDP for over six years using the Microsoft CORREL function.  It came out to a statistically significant 0.86.

SBA loans are good for the economy

SBA loan activity is robust.

The SBA approved $299,139,000 in SBA 7(a) loans for the week ending May 17th.

This is a 20% increase over last year.

The correlation of SBA 7(a) loan approvals with our nation's economic performance is strong.

Just for fun I calculated the correlation coefficient between SBA 7(a) loan volume and GDP for over six years using the Microsoft CORREL function.  It came out to a statistically significant 0.86.

This should be taken as a positive leading economic indicator.

  

The SBA and meiosis

meiosis

my-O-sis 

1. Understatement for rhetorical effect.

2. The process of cell division in which the number of chromosomes per cell is reduced to one half.

From Greek meiosis (lessening), from meioun (to lessen), from meion (less).  

 _______________________________________________

TIP OF THE WEEK 

SBA loans are OK.

_____________________________________

Indices:

PRIME RATE= 3.25%
SBA LIBOR Base Rate May 2013 = 3.20%
SBA Fixed Base Rate May 2013 = 4.52%

________________________________________

Debenture Rate for May   

The debenture rate is 2.07% but note rate is 2.107% and effective yield is only 4.15%.

 ________________________________________________

AHEAD OF THE YIELD CURVE 

This month’s Treasury auction of 30 year bonds went off at a yield of only 2.98%, the lowest yield since December.

April’s auction had a yield of 2.998% compared to March’s 3.248%, the highest in a year.

 A factor in the favor of buyers of 30-year bonds--inflation fears, the biggest threat to the 30-year bond's value over time, have pulled back over the past month.  Several gauges of inflation in the U.S. released in recent weeks fell below the Fed's 2% target, and some bond bulls believe falling inflation gives the Fed breathing room.

The capacity utilization rate, which measures how much plants and factories are being used, is one of the Federal Reserve’s favorite gauges of the economy.  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.

Last week the Federal Reserve reported that capacity utilization fell to 77.8 percent from 78.3 percent the prior month.  This is only 0.1 percentage point above its level of a year earlier.

 Mild inflation gives the Federal Reserve more latitude to continue with its aggressive policies to spur greater economic growth. The Fed has said it plans to keep the short-term interest rate it controls at a record low near zero until the unemployment rate falls below 6.5%, provided inflation remains in check.

So where then are interest rates going?

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:

DEC13- 0.32

DEC14- 0.47

DEC15- 0.84

DEC16- 1.48

DEC17- 2.17

DEC18- 2.75

DEC19- 3.07

What does all this mean?

I don’t know.

It would appear that interest rates are never ever going up.

__________________________________________
OFF BASE

A three day weekend finally beckons.  

After three months without a holiday, Memorial Day is here.

According to the Federal Reserve, here are the remaining holidays for 2013:

Memorial Day May 27
Independence Day July 4
Labor Day September 2
Columbus Day October 14
Veterans Day November 11
Thanksgiving Day November 28
Christmas Day December 25

SBA 504 Debenture Rate for May

Debenture Rate for May

The debenture rate is 2.07% but note rate is 2.107% and effective yield is only 4.15%.

SBA loans are good for the economy

Small business is the engine that runs the U.S. economy as it has generated 65 percent of net new jobs over the past 17 years.   The fuel that runs that engine is the SBA 7(a) loan program.

SBA 7(a) loans account for most long term loans made to small businesses.    When comparing SBA term loans with bank CALL report term loans, SBA loans account for as much as 70% of all long term loans made to small businesses.   The longer term amortization conserves precious cash flow and improves the permanent working capital of small business.

The correlation of SBA 7(a) loan approvals with our nation's economic performance is strong.

Just for fun I calculated the correlation coefficient between SBA 7(a) loan volume and GDP for over six years using the Microsoft CORREL function.  It came out to a statistically significant 0.86.

For the week ending May 10^th, $352,951,000 SBA 7(a) loans were approved bringing the year to date total to $10,091,740,000.  

SBA loans are good for the economy

The SBA approved $295,258,000 in SBA 7(a) loans for the week ending May 3rd.  This is a 20% increase over the same year to date period last year, an increase of over $1,645,172,000.

This is positive news since the the correlation of SBA 7(a) loan approvals with our nation's economic performance appears to be quite strong.  Just for fun I calculated the correlation coefficient between SBA 7(a) loan volume and GDP for over six years using the Microsoft CORREL function.  It came out to a statistically significant 0.86.

SBA 7(a) Rate Update

Indices:

PRIME RATE= 3.25%
SBA LIBOR Base Rate May 2013 = 3.20%
SBA Fixed Base Rate May 2013 = 4.52%

Lenders can charge up to 2.75% over these indices.

SBA loans are good for the economy

SBA 7(a) loan volume continues to pick up the pace as another $375,246,000 in SBA 7(a) loans were approved for the one week ending April 26th.  That's a nice pick up from last week's pace of just over $293,840,000.

For the month of April, $1,353,386,000 in SBA 7(a) loans were approved.

For those of you fretting about the economy stalling right now, keep in mind that the correlation of SBA 7(a) loan approvals with our nation's economic performance appears to be quite strong.  Just for fun I calculated the correlation coefficient between SBA 7(a) loan volume and GDP for over six years using the Microsoft CORREL function.  It came out to a statistically significant 0.86.

The SBA and captious

captious

KAP-shuhs

Having an inclination to find faults, especially of a trivial nature.

Via French from Latin capere (to seize).

 _______________________________________________

TIP OF THE WEEK 

SBA has decided to not be so captious towards borrowers.

SBA form 912, Statement of Personal History, has been revised.  The most notable revision is question 8. 

It used to ask: Have you EVER been charged with, and/or arrested for, any criminal offense other than a minor motor vehicle violation?

It now asks: Have you BEEN arrested in the past six months for any criminal offense?

_____________________________________

Indices:

PRIME RATE= 3.25%

SBA LIBOR Base Rate April 2013 = 3.20%

SBA Fixed Base Rate April 2013 = 4.67%
________________________________________

Debenture Rate for April  

The debenture rate is 2.08% but note rate is 2.117% and effective yield is only 4.162%.

 ________________________________________________

AHEAD OF THE YIELD CURVE 

To put this any other way would be captious.

Economic growth in the first quarter of this year soared to a 2.5% annual pace, compared to the anemic 0.4% pace in the last quarter of last year.

That might be overstating it a bit. 

In March, employers added just 88,000 jobs vs. an average 208,000 the previous two months.

Keep your eyes and ears open for Friday’s report on jobs for April.  

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

February 268,000

January 148,000

2012

December 155,000

November 161,000

October 137,000

September 114,000

August 142,000

July 181,000

June 45,000

May 77,000

April 68,000

March 143,000

February 240,000

January 243,000

2011

December 203,000

November 157,000

October 112,000

September 158,000

August 104,000

July 127,000

June 20,000

May 25,000

April 232,000

March 194,000

February 235,000

January 68,000

2010

December 121,000

November 93,000

October 210,000

September (41,000)

August (1,000)

July (66,000)

June (175,000)

May 431,000

April 218,000

March 230,000

February (36,000)

January (26,000)

2009

December (150,000)

November (11,000)

October (111,000)

September (215,000)

August (201,000)

July (304,000)

June (443,000)

May (322,000)

April (504,000)

March (699,000)

February (651,000)

January (655,000)

2008

December (681,000)

November (597,000)

October (423,000)

September (403,000)

August (127,000)

July (67,000)

June (100,000)

May (47,000)

April (67,000)

March (88,000)

February- (83,000)

January- (76,000)

What does all this mean?

I don’t know.

Just before April’s job report comes out, the Federal Reserve meets on monetary policy.

Federal Reserve policy makers have said they will keep interest rates low until the labor market improves “significantly.” 

It would appear that interest rates are never ever going up.

__________________________________________
OFF BASE

Captious critics of Juan Pierre like to point out that he has been caught stealing more times than anyone else playing baseball right now.

Having been thrown out 198 times, Juan is now number seven on the all time caught stealing list.  He is now number eighteen on the all-time stolen base list with 596 steals.

Doing the math for stolen base percentage (SB% = Stolen Bases/(Stolen Bases + Caught Stealing), Juan comes out to just over 75%.

There is a statistic related to stolen base percentage called "Stolen Base Runs" or SBR ((.3 x Stolen Bases) - (.6 x Caught Stealing)).  The break even success rate for steals (the rate at which an attempt to steal is neither helping nor hurting the team in terms of total runs scored) is about 67%. Each successful steal adds approximately .3 runs to a team's total runs scored.

So Juan is doing just fine.

Juan now needs another 20 stolen bases to pass George Davis who has 616 stolen bases.  George began playing for the Cleveland Spiders in 1890.  Fortunately he was traded away after a few years as the 1899 Spiders became the worst team ever wining only 20 games while losing 134.  The Spiders lost 40 of their last 41 games, and finished 84 games behind the 1899 National League champion Brooklyn Dodgers.  The Spiders were so bad that the National League forced them to quit playing.  While they were at it, they forced three other lousy teams to also fold.  The American League soon arose to fill the void.