SBA 504 UPDATE – May Update

Lowest Rate in Nearly Half a Century

With a jobs gain of 263,000 the report was positive for the 103rd consecutive month and the Unemployment Rate declined to 3.6%, matching a number last seen five months after Apollo 11’s moon landing. Additionally, the previous two months’ reports were revised upward, and average hourly earnings rose 3.2% from a year earlier. Since the US has more job openings than unemployed people it is considered to be at “full employment,” yet this strong economic data seems to have little impact on inflation, something that was alluded to in Chairman Powell’s comments after the FOMC meeting concluded on Wednesday with no change in policy.

In addition to leaving the Fed’s target rate for Federal funds at 2.25-2.50%, the Committee reduced its rate for IOER (Interest on Excess Reserves) from 2.40% to 2.35%. This does not change their monetary policy but does seem to reflect their previously discussed patient approach to increasing interest rates by lowering its rate on bank deposits.

The commentary above is provided by Eagle Compliance, LLC (Eagle). Eagle is responsible for the marketing, pricing, and sale of the certificates (debentures) sold to investors to fund the SBA 504 Loan Program.

Fundings for 10-year 504 loans are provided on an every other month basis. The effective rate above represents the May, 2019 funding.