Kitsap businesses, banks navigate fraught federal small-business loan program

May 2, 2020 – Kitsap Sun

Author: Christian Vosler, Kitsap Sun, Published May 2, 2020

Spring is the beginning of peak season in the restaurant business, and the time of year when Brett Hayfield usually starts hiring more employees to work at his two restaurants, the Yacht Broiler Club in Silverdale and The Boat Shed in Manette.

This spring, those hirings turned into layoffs as the coronavirus swept across the country, and Washington state ordered all non-essential businesses to close indefinitely.

“This is our time, so to get shut down, it couldn’t be any worse,” Hayfield said.

Like many small business owners affected by the COVID-19 pandemic, Hayfield looked to the federal government for help. But the federal loan program meant to prop up small businesses has proven difficult to navigate both for owners and banks tasked with making the loans.

The Payroll Protection Program (PPP), which is administered through the Small Business Administration, is a low-interest loan that businesses with 500 or fewer employees can use to pay workers for up to eight weeks, plus certain other expenses like rent and utilities. Businesses don’t have to pay back the loan if they use at least 75% of the money to keep or hire employees.

Since it opened on April 2, the program has been the focus of nationwide scrutiny —large, publicly-traded companies like Shake Shack received millions in loans while local businesses struggled to have their applications approved. Applicants have run into problems with vague guidelines and technical glitches with the online loan portal.

Kitsap business owners who have been successfully approved for funding, like Hayfield, still face difficulties. A PPP loan doesn’t solve the problems facing a restaurant that has laid off employees and isn’t bringing in any revenue.

“We basically have to hire them back even though we’re not open,” Hayfield said.

To have a loan forgiven, a business must use it within eight weeks to pay its employees. Funding can’t be used to pay vendors, purchase inventory or many other expenses. The additional $600 a week in unemployment benefits that were approved as part of the $2 trillion federal coronavirus relief package means many laid-off employees are making more at home than they would at work.

“We get no benefit out of that, we’re getting people off unemployment, which is admirable, but the employees quite frankly are going to be disappointed because they’re making more money right now than they will from the operator,” Hayfield said.

On top of that, when restaurants reopen, it will likely be at a reduced capacity. Seasonal employees may be laid off after returning to work because revenue will be at a fraction of normal levels.

“It’s a real Catch-22,” Hayfield said.

Navigating the system

Local banks, meanwhile, have had to deal with a high volume of applications, technology issues and vague rules from the federal government concerning the loans.

Liberty Bank has had more success than most in Kitsap. The Poulsbo lender (formerly Liberty Bay Bank), has boasted a 100% success rate with its applications, meaning every business, nonprofit and church that applied was approved for a loan. In total, Liberty Bank has secured $40 million and counting for more than 210 businesses.

But it wasn’t easy. The first round of PPP funding, $349 billion, ran out in 13 days. Congress approved a second round of funding of $310 billion, which opened for applications April 27 and is expected to be depleted just as quickly.

During the first round of funding, Liberty Bank employees worked for two weeks straight, including on Easter, to put together applications and submit them to the SBA.

“There was a dedication to it, knowing that we were going to be helping small businesses that were struggling in our community,” Liberty Bank CEO Rick Darrows said.

During the second round, the bank used a special program to preload batches of applications. Soon after applications opened Monday morning, the system crashed. Employees kept resending the applications, slipping one or two through at a time as the system would allow.

Darrow said the guidelines from the federal government weren’t set even as the program was being rolled out.  

“You had a situation where, as a banker, you had to make a decision, are you going to participate in this knowing that not all of the rules have been put into place?” Darrow said.

Chris Frazier, who owns Waterfront CPA Group in Silverdale, has seen both sides of the coin. Frazier’s accounting firm normally makes most of its revenue during the first four months of the year, when people seek help filing their tax returns.

The downturn has forced Frazier to keep seasonal employees at home even as the firm has been flooded with questions from small business owners about how they can get help from the federal government. Frazier applied for and received a PPP loan through Liberty after first trying with Chase Bank.

“In 13 days (the PPP) was out of money and (Chase) never said anything,” Frazier said.

Liberty not only answered the phone but was able to process Waterfront CPA’s application the same day. The Poulsbo bank has also been accepting applications from businesses that aren’t current customers.

“Having somebody kind of go out of their way and say you’re not a client here, we’ll take you, for me that was huge,” Frazier said.

Smaller regional banks may have more success in securing funding because of their size, Frazier said. Many international banks were flooded with thousands of applications minutes after the program portal opened. Some banks restricted who could apply — only processing applications for those with an existing account or loan on the books.

“If you were basically waiting in line and nobody was getting back to you, Liberty (Bank) was processing your loan,” Frazier said.

Moving forward

The program has still been helpful for some local businesses.

Haylee Herdman, the owner of Herdman Plumbing in Silverdale, found her business suddenly shut down when Washington state deemed construction a non-essential service in late March. Most of Herdman’s business comes from new plumbing on construction projects.

“We had to furlough pretty much the majority of our employees because we had no work for them,” Herdman said.

Herdman was able to weather April on the income made in March before work shut down, but the company is expecting a rough May. Funding from the PPP should help to pay employees that are back at work as of Wednesday.

“We are putting what we got towards payroll and employer-paid benefits that go to our employees and utilities and rent,” Herdman said.

Steve Sego, who owns The Dock Bar & Eatery in Port Orchard, has been able to rehire some of his employees that were laid off during the shutdown thanks to $56,000 in federal funding.

The restaurant has transitioned to providing takeout and providing delivery in South Kitsap. The Dock’s landlord has also waived rent for April and May.

“We found a path, we’re not prospering, but we’re keeping the doors open and we’re preparing that transition to being a viable restaurant again,” Sego said.

CORRECTION: An earlier version of this story stated that an additional $600 a month in unemployment benefits for laid-off workers was approved as part of the federal coronavirus relief package. The additional unemployment money is $600 a week. 

How a Seattle business owner got an SBA loan that works for him

Author: Michelle Li (KING5)Published: 5:38 PM PDT April 24, 2020 Updated: 4:02 PM PDT April 25, 2020

BELLEVUE, Wash. — As small business owners struggle to get relief as the second round of federal funding gets doled out by the Small Business Administration and local lenders, other business owners and lenders are sharing what worked for them during the first go-round.

In the first round of Paycheck Protection Program funding, the SBA of Seattle says it along with its lending partners approved 14 years of SBA lending in just 14 days. 74-percent of the loans approved were $150,000 or less, though, across the state, Washington banks doled out more than $4.9 billion. 

If there’s something to be learned from the first round of funding, it’s that business owners have to act fast and shop around.

That’s exactly what Ryan Glant of Pacific Iron and Metal did to secure a loan for his 103-year-old company — a company that survived the Spanish Flu and the Great Depression. Glant is the president and CEO of Glant Pacific Companies in Sodo and employs about 100 people. The PPP funding will allow him to rehire some of those he had previously laid off. 

“We just feel really fortunate it,” said Glant. “It’s a lifeline. Unfortunately, in some cases, people didn’t ‘get it’ or realize you need to be on top of it early and often.”

Glant had been in touch with Liberty Bank’s president Alan Fulp, despite having a bank account with a large national bank. The community bank is an expansion of the Liberty Bay Bank in Poulso and had just expanded earlier this year to Bellevue.

“I have happened to know Alan from the community for a long time,” said Glant. “So just by happenstance, we started connecting. Things change and our environments change, so it behooves us to explore other potential partnerships.”

And that’s the relationship that paid off.

Glant said his team worked on three separate bank applications when the first round of funding was announced. Liberty Bank was the only one to come through.

“Liberty Bank was really straightforward,” said Glant. “Alan’s team was awesome. We did apply to three different banks, and they all had very different processes. But Alan made it really streamlined and therefore our SBA loan confirmation quickly came back.”

Nationwide, the first round of forgivable loans sent $342.3 billion to about 1.6 million businesses nationwide. And though it seems like a staggering amount of help, Fulp said it was only anticipated to bail out a third of small businesses.

“It’s been characterized a little bit as like building an airplane in the sky,” said Fulp. “If we’re the bank that’s pushing the money out the door, we want to make sure that we have it right. And so I think a lot of banks were uncomfortable with the uncertainty of that, and they chose to take a step back and wait for the details to emerge, which is reasonable.”

Fulp said the process itself — at least for the first round — was pretty easy. The borrower must fill out a special application. Then the bank has to submit it to the SBA. The SBA has a special portal set up for submitting the loans, and when that happens successfully, banks receive a number confirming the SBA has successfully received the application. 

“Then you know that you’re confirmed in the system,” said Fulp. “Up until you receive that number, you don’t have a place in line. I would say it’s not a complicated process, but the bank has to be familiar with that SBA portal process, and not every bank is an SBA lender.”

Small business owners across the country have complained their banks sat or fumbled their applications. Perhaps Liberty’s flexibility as a smaller, community bank helped speed along the process.

“I agree with that,” said Fulp.

Fulp said Liberty Bank helped more than 50 area businesses, securing millions of dollars in payroll. 

“We’ve had to take a little bit of a step of faith that the federal government is going to iron out these details and take care of the banks that are pushing the money out the door, in addition to taking care of the small businesses,” said Fulp. “I think as things have evolved, it has been a good process.”

Scammers Pretending to be the FDIC

FDIC Consumer News, March 23, 2020

https://www.fdic.gov/consumers/consumer/news/march2020.pdf

Security Tips – Social Engineering

What is a social engineering attack?

In a social engineering attack, an attacker uses human interaction (social skills) to obtain or compromise information about an organization or its computer systems. An attacker may seem unassuming and respectable, possibly claiming to be a new employee, repair person, or researcher and even offering credentials to support that identity. However, by asking questions, he or she may be able to piece together enough information to infiltrate an organization’s network. If an attacker is not able to gather enough information from one source, he or she may contact another source within the same organization and rely on the information from the first source to add to his or her credibility.

What is a phishing attack?

Phishing is a form of social engineering. Phishing attacks use email or malicious websites to solicit personal information by posing as a trustworthy organization. For example, an attacker may send email seemingly from a reputable credit card company or financial institution that requests account information, often suggesting that there is a problem. When users respond with the requested information, attackers can use it to gain access to the accounts.

Phishing attacks may also appear to come from other types of organizations, such as charities. Attackers often take advantage of current events and certain times of the year, such as:

• natural disasters (e.g., Hurricane Katrina, Indonesian tsunami)
• epidemics and health scares (e.g., H1N1)
• economic concerns (e.g., IRS scams)
• major political elections
• holidays

How do you avoid being a victim?

• Be suspicious of unsolicited phone calls, visits, or email messages from individuals asking about employees or other internal information. If an unknown individual claims to be from a legitimate organization, try to verify his or her identity directly with the company.
• Do not provide personal information or information about your organization, including its structure or networks, unless you are certain of a person’s authority to have the information.
• Do not reveal personal or financial information in email, and do not respond to email solicitations for this information. This includes following links sent in email.
• Don’t send sensitive information over the internet before checking a website’s security. (See Protecting Your Privacy for more information.)
• Pay attention to the Uniform Resource Locator (URL) of a website. Malicious websites may look identical to a legitimate site, but the URL may use a variation in spelling or a different domain (e.g., .com vs. .net).
• If you are unsure whether an email request is legitimate, try to verify it by contacting the company directly. Do not use contact information provided on a website connected to the request; instead, check previous statements for contact information. Information about known phishing attacks is also available online from groups such as the Anti-Phishing Working Group.
• Install and maintain anti-virus software, firewalls, and email filters to reduce some of this traffic. (See Understanding Firewalls, Understanding Anti-Virus Software, and Reducing Spam for more information.)
• Take advantage of any anti-phishing features offered by your email client and web browser.

What do you do if you think you are a victim?

• If you believe you might have revealed sensitive information about your organization, report it to the appropriate people within the organization, including network administrators. They can be alert for any suspicious or unusual activity.
• If you believe your financial accounts may be compromised, contact your financial institution immediately and close any accounts that may have been compromised. Watch for any unexplainable charges to your account.
• Immediately change any passwords you might have revealed. If you used the same password for multiple resources, make sure to change it for each account, and do not use that password in the future.
• Watch for other signs of identity theft. (See Preventing and Responding to Identity Theft for more information.)
• Consider reporting the attack to the police, and file a report with the Federal Trade Commission.

To learn more, please visit https://www.us-cert.gov/ncas/tips

Source: Cybersecurity and Infrastructure Security Agency (CISA)

Danielle Hampton Accepts Commercial Loan Assistant Position

Poulsbo and Greater Puget Sound, WA – Liberty Bank is pleased to announce the promotion of Danielle Hampton to the role of Commercial Loan Assistant. She brings 22 years of lending experience to her position.

In her new role, she will be processing commercial, residential, and consumer loans. “I look forward to assisting our lenders and our new team leader with various tasks such as construction loan tracking, financial covenant tracking, and helping to grow our loan totals,” Danielle says.

Danielle has been with Liberty Bank since September 2008 when the bank was still raising capital to open its doors. She was previously in the loan operations department. She appreciates the small community bank atmosphere is at Liberty Bank. “I’m looking forward to putting faces to names in my new role,” Danielle says. “I’m familiar with our customers’ loan file, but now I will be able to greet them as they come into the bank and continue to assist them.”

Outside of work Danielle enjoys spending time with her family, gardening, and camping.  “I am a huge fan of our local sports teams. Go Hawks!”

Kristi Sutton Retires From Liberty Bank

We are wishing Kristi Sutton a fulfilling retirement, may her new journey be filled with joy!  Kristi has been with Liberty Bank since 2011 as a Relationship Associate and she brought over 23 years of banking expertise to her role. She supported the banking team and clients with loan processing and administration. Kristi also served in the North Kitsap community through her dedicated volunteer service and held a number of roles with Poulsbo-North Kitsap Rotary including Club Secretary.

Kristi will be missed here at Liberty Bank. We wish her the very best for her retirement.

Lisa Madland Joins Liberty Bank

Poulsbo and Greater Puget Sound, WA – Lisa Madland joined Liberty Bank in February 2019 as VP of Business Services. Lisa will be working on software development and adding to the technology services for Liberty Bank. “I’m excited to be a part of the coming growth for the company,” she says. Lisa has been in the banking profession for a number of decades, and she has spent most of her career at small community banks. Before joining Liberty Bank, Lisa was the VP of Operations at Salal Credit Union.

Liberty Bank’s commitment to building relationships, and as Lisa says, “providing the kind of service that goes above and beyond,” was a real draw for her. “It makes me happy to come in to work every day. I have always loved being a part of a community bank that offers more to their clients than just products.”

Outside of work, Lisa likes to read, travel, and scrapbook.  “Love going on cruises,” Lisa says. “We [my husband and I] are big cruisers.”

Cyber Security

If you are a victim of fraud, please contact us at 360-779-4567.

Social Engineering Attack

Source:  Dept. of Homeland Security

In a social engineering attack, an attacker uses human interaction (social skills) to obtain or compromise information about an organization or its computer systems.  An attacker may seem unassuming and respectable, possibly claiming to be a new employee, repair person, or researcher and even offering credentials to support that identity.  However, by asking questions, he or she may be able to piece together enough information to infiltrate an organization’s network.  If an attacker is not able to gather enough information from one source, he or she may contact another source within the same organization and rely on the information from the first source to add to his or her credibility.  Read More

Cyber Security Awareness Basics

Source: fdic.gov

Consumers increasingly rely on computers and the Internet — the “cyber” world — for everything from shopping and communicating to banking and bill-paying. But while the benefits of faster and more convenient cyber services for bank customers are clear, the risks posed by these services as well as the strategies for preventing or recovering from cyber-related crimes may not be as well-known by the average consumer and small business owner.

Common cyber-related crimes include identity theft, frauds, and scams. Identity theft involves a crime in which someone wrongfully obtains and uses another person’s personal data to open fraudulent credit card accounts, charge existing credit card accounts, withdraw funds from deposit accounts, or obtain new loans. A victim’s losses may include not only out-of-pocket financial losses but also substantial costs to restore credit history and to correct erroneous information in their credit reports.

How to Avoid Identity Theft

The best protection against identity theft is to carefully protect your personal information, for example:

• Do not share personal information over the phone, through the mail, or over the internet unless you initiated the contact or know the person you are dealing with;
• Be suspicious if someone contacts you unexpectedly online and asks for your personal information. It doesn’t matter how legitimate the e-mail or website may look. Only open e-mails that look like they are from people or organizations you know, and even then, be cautious if they look questionable. Be especially wary of fraudulent e-mails or websites that have typos or other obvious mistakes;
• Don’t give out valuable personal information in response to unsolicited requests. Social Security numbers, financial account information and your driver’s license number are some of the details that should be kept confidential;
• Shred old receipts, account statements, and unused credit card offers;
• Choose PINs and passwords that would be difficult to guess and avoid using easily identifiable information such as your mother’s maiden name, birth dates, the last four digits of your social security number, or phone numbers;
• Pay attention to billing cycles and account statements and contact your bank if you don’t receive a monthly bill or statement since identity thieves often divert account documentation;
• Review account statements thoroughly to ensure all transactions are authorized;
• Guard your mail from theft, promptly remove incoming mail, and do not leave bill payment envelopes in your mailbox with the flag up for pick up by mail carrier;
• Obtain your free credit report annually and review your credit history to ensure it is accurate;
• Use an updated security program to protect your computer; and
• Be careful about where and how you conduct financial transactions, for example don’t use an unsecured Wi-Fi network because someone might be able to access the information you are transmitting or viewing.

How to Avoid Frauds & Scams

There are numerous scams presented daily to consumers so you must always exercise caution when it comes to your personal and financial information. The following tips may help prevent you from becoming a fraud victim.

• Be aware of incoming e-mail or text messages that ask you to click on a link because the link may install malware that allows thieves to spy on your computer and gain access to your information;
• Be suspicious of any e-mail or phone requests to update or verify your personal information because a legitimate organization would not solicit updates in an unsecured manner for information it already has;
• Confirm a message is legitimate by contacting the sender (it is best to look up the sender’s contact information yourself instead of using contact information in the message);
• Assume any offer that seems too good to be true, is probably a fraud;
• Be on guard against fraudulent checks, cashier’s checks, money orders, or electronic fund transfers sent to you with requests for you to wire back part of the money;
• Be wary of unsolicited offers that require you to act fast;
• Check your security settings on social network sites. Make sure they block out people who you don’t want seeing your page;
• Research any “apps” before downloading and don’t assume an “app” is legitimate just because it resembles the name of your bank or other company you are familiar with;
• Be leery of any offers that pressure you to send funds quickly by wire transfer or involve another party who insists on secrecy; and
• Beware of Disaster-Related Financial Scams.   Con artists take advantage of people after catastrophic events by claiming to be from legitimate charitable organizations when, in fact, they are attempting to steal money or valuable personal information.

Poulsbo-North Kitsap Rotary Club Gala

Liberty Bank’s Kristi Sutton, Relationship Associate, and Tony Fyrqvist, VP & Relationship Manager, were both in attendance at Poulsbo-North Kitsap Rotary Club’s Halloween-themed gala and auction on Saturday, October 27^th.. The event raised $97,924. Funds raised will go to support a variety of other community organizations including: North Kitsap schools, Poulsbo Historical Society, City of Poulsbo Parks and Recreation programs, Maritime Museum, and Fish Park.

Coffee Oasis Fundraising Gala

Liberty Bank was a proud sponsor of the Hope Gala,Coffee Oasis’ recent fundraiser to end youth homelessness. The evening was held on Saturday, October 20^th at the Kitsap Golf and Country Club. Liberty Bank President and CEO, Rick Darrow, his wife Janna, and Liberty Bank Loan Officer Tony Fyrqvist and his wife Lisa were in attendance.

The Hope Gala consisted of a silent auction along with a paddle raise for general support. The evening also included a case study presentation and discussion led by the Coffee Oasis founder Dave Frederick.

Coffee Oasis is a local non-profit organization that offers youth programs including youth centers, street and school outreach, job training, and crisis intervention. To learn more about Coffee Oasis and their mission, please visit their website here.