August 7, 2009
Although our recession has many folks really stressed, there are opportunities, when identified and properly analyzed, we can assist you to recognize how to best get through the many complications or "the perfect storm" of our marketplace. I have received many inquiries from folks just like you who have significant insight within your business and it's unfortunate that what is happening to them are happening to all of us. Do qualified investors question about their timing the market? Yes, however with consideration for investing, one question "is it healthy" for any future business model to go forward, with the cash flow to justify the market value? That is where I can be of assistance.
Do you think that we have seen the worst in our current recession? This question that I was asked earlier last week does not have a simple answer, but I have a few that could make a difference. How about the employment and creation of new jobs? When will that occur? How about the impact of distressed real estate and retraction of values? And how about the many recent new taxes for both business and families that have affected each person's spend able income and ultimately the purchasing power of the consumer in the marketplace? Just bringing up these issues has caused a restriction in confidence, and I believe rightly justified.
I am speaking with lenders several times a week, with the good news that interest rates are holding steady for now, but the 4th quarter 2009 should see rates moving upward. The not so good news is which lender is sincere about underwriting and funding new financing. Speaking with appraisers both locally, regionally, and nationally, they have provided me the lenders who have engaged their services and have told me which lender likes either small loans or multiple asset deals. It seems to me that the opportunity is available, I think we should discuss the merits and I would like to assist you. I will contact you shortly to set an appointment, unless you want to talk now. Thank you for your professional courtesy in this matter.
May 12, 2009
As a courtesy from Amato Commercial Group we felt it necessary to make you aware of the current lending rules for SBA. The reduced fee for SBA includes the 1.5% loan processing fee and the .5 bank participation fee. The fee elimination will apply until the $3.6 billion allocation has been exhausted. SBA estimates it will be in effect for loans approved through approximately December 31, 2009.Please feel free to contact us at any time to discuss these changes.
According to the US Department of the Treasury as of 2/17/2009 the following changes to SBA lending will be made:
· Temporarily Eliminate SBA Loan Fees to Reduce the Cost of Capital
o Elimination of Borrower and Lender Fees for 504 Loans: On any new eligible 504 applications submitted beginning today, SBA will temporarily eliminate the Certified Development Company (CDC) processing fees charged to borrowers and the third-party participation fees charged to lenders. As a temporary provision authorized by the Recovery Act, these measures will reduce costs to both borrowers and lenders participating in the 504 program, which has a demonstrated record of supporting community development and creating jobs.
- Elimination of Up-Front Fees for 7(a) Loans: For any new eligible 7(a) loan, the SBA will temporarily eliminate the up-front fees that lenders pass along to borrowers. These fees – which go up to 3.75 percent for larger loans – increase the cost of borrowing for small businesses and make it more difficult for them to access the credit they need to expand or make new investments.
- Rebates for Fees Paid Since February 17th: For borrowers or lenders charged any of these fees on loans approved on or after February 17th, the SBA will provide a refund, to ensure that Recovery Act provisions create the maximum possible economic stimulus.
- A Pledge to Quickly Turn Around Loans: To maintain a high level of service to potential borrowers and lenders alike, the SBA also pledges that complete loan applications will be turned around quickly by the SBA – usually in as little as two to three days.
- Temporarily Raise Guarantees to Up to 90 Percent in SBA's 7(a) Loan Program: The purpose of the 7(a) loan program is to provide a government guarantee that reduces the risk lenders face when they make loans to borrowers who cannot find credit elsewhere. But during the current recession, the guarantees – up to 85 percent for loans at or below $150,000 and up to 75 percent for larger loans – have not been large enough to give banks the confidence they need to lend. As part of its implementation of the Recovery Act, the SBA today announces:
- An Increase in Maximum Loan Guarantees to 90 Percent: Beginning today, any lender who participates in the 7(a) program can request a guarantee from the SBA of up to 90 percent for each eligible loan. This temporarily available increase in guarantees will help provide banks with the greater confidence they need to extend credit during the current recession.
- A Confidence Boost Lenders Need to Extend Credit: Combined with Treasury's efforts to unlock secondary markets, higher loan guarantees will ensure that lenders have both greater safeguards against possible credit losses and assurances that there will be an active secondary market to purchase their loans and provide the liquidity they need to keep lending.
According to Wells Fargo Financial Products Interest Rate and Commodity Markets Update:
March 27, 2009
Economic and Interest Rate Outlook 10-Year Treasury Rate
For now, it looks like the 50 basis point drop in the 10-Year Treasury rate enjoyed last week was short-lived. By Thursday, the 10-Year Treasury rate climbed to 2.74% or 21 basis points from its post-Fed meeting low of 2.53%. The rise in rates followed the surge in the equity markets as U.S. Treasury Secretary Geithner announced the details of the Private Public Investment Plan to remove toxic assets from bank’s balance sheets. The Treasury plan was followed later in the week by some rare and relatively positive economic news as Durable Goods Orders and New Home Sales were both better than their dismal expectations. With the Dow up nearly 20% from its recent low, rates were pushed up as the appetite for risk grew. Another culprit of the rate increase was the ever growing supply of U.S. Treasuries as $98 billion in 5 and 7-year notes were issued during the week. The Fed also started its program of buying U.S. Treasuries and started with $7.5 billion in 7 and 10-year notes on Wednesday and followed with another $7.5 billion of 3-year notes on Friday. The purchases appeared successful in keeping a lid on rates rising further given that the reception to the 5-year Treasury auction on Wednesday was a bit weak. The 7-year auction on Thursday went better and the 10-Year Treasury rate actually fell on the day. So the Fed’s plan to buy U.S. Treasuries to keep borrowing rates low has started and they will use this tool as Treasury auctions hit the market and when they see rates creep up. They will likely use this “quantitative easing” tool only when they need it but it appears they will indeed need it. Fed President Yellen said this week the Fed wants the authority to issue its own debt, as another tool in the box. This would give the Fed some flexibility when it comes time to raise rates once we get through the current turmoil and would reduce the need for the Fed to sell Treasuries (to manage rates) – which could disrupt the market. On a more positive final note, 2 and 5-year Treasury rates managed smaller rate increases while swap spreads for these terms fell. As a result, swap rates for these terms remain close to the levels seen last week as rates dropped after the Fed announcement.
Commodity Update
Crude Oil held onto its recent gains and managed to stay above the $50 price as it hit a four month high this week. The rising equity markets, better than expected economic data, and the U.S. Treasury’s plan to buy toxic assets from banks helped Crude maintain a bid through most of the week. Yet, skepticism about the recent rally is emerging as some analysts see the 3.3 million barrel rise in inventory this week putting downward pressure on prices. OPEC member Venezuela stated that the organization could decide to make further production cuts at its scheduled meeting in May should inventories remain high. Still, gasoline demand is holding up and inventories fell on the week. So, at least in the short term, Crude continues to struggle with demand and supply imbalances while gasoline could have these factors under better control. Volatility in Natural Gas market continued this week but this time to the down side. As cold weather, a larger supply draw than expected and Administration policies pushed up prices last week, an unexpected small increase in inventories on Thursday quickly turned prices around. Warmer temperatures added to the supply build and jolted the market back to reality as supplies remain ample and demand is slack. The rise in supply was the earliest in the year since 2003, although draw and inventory report data remain erratic. Like Crude, Copper held on to its gains this week which has jumped nearly 20% in March alone. Stocks at the Shanghai Futures Exchange (SHFE) declined for the third consecutive week as Copper managed to trade over $4000 per ton – a significant rise over the late December prices which were below $3000. Aluminum stocks at SHFE have also been falling in recent weeks and contrary to rising inventories on the London Metals Exchange. Overall, Aluminum is holding on to its recent rise, although it has been a bumpy ride in the past week. Still, some believe part of the recent metal rally is due in part to short covering and support by the Chinese SRB (State Reserves Bureau) as inventories remain are inflated against historical levels. Increased demand will likely be needed to lend more upside price support.
*The above mentioned information was received from Wells Fargo Bank.
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