As COVID-19 wreaked havoc on local businesses, Americans everywhere began hearing about SBA loans. The Small Business Administration loans are government-backed loans obtained via local and national banks. As the name suggests, the loans are earmarked for small businesses. During the pandemic, the government began issuing loans of two types: the PPP loan (Paycheck Protection Program) and the SBA Economic Injury Disaster Loan.
1st Security Bank of Washington has always helped its clients secure traditional SBA loans, such as the SBA 7A loan and SBA 504 loan. These loans, says Erin Shannon, 1st Security’s SBA manager, are used for things like “business acquisition, equipment, purchases, partnership buyouts, new startup businesses like restaurants who would never get the time of day from a normal lender, higher-risk industries,” or are used in real estate purchases, such as when a business needs to develop a space for its business, and are structured differently than the Paycheck Protection loans.
Many businesses aren’t able to secure these loans right now because of the precarious nature of the pandemic. Enter the PPP: Since COVID, 1st Security has helped many clients navigate the PPP loan application process. The loans, which need to be used to pay salaries and rent and utilities (a 60/40 percent split over 24 weeks, extended from eight), can be entirely forgivable if used correctly.
“One of the things that became immediately clear to me,” Shannon says of the PPP, “is that it was very different from a traditional SBA loan in the way it was structured, specifically in the way that the repayment or lack thereof was set up.”
One of those clients 1st Security helped to obtain a PPP loan is a well-loved Seattle institution, Tutta Bella, the Italian pizzeria and pasta chain with six locations across the city. Founder Joe Fugere had fortuitously switched the company’s banking to 1st Security a few months before COVID hit. The company had been restructuring other loans and had also taken out a “regular” SBA loan with the bank, but when the pandemic began, the bank and the customer sprang into action to obtain the PPP loan and pivot the business, to one that focused on takeout.
“These owners are not only awesome business owners but they truly, truly care about their staff,” Shannon says. “They’re my favorite story just because they’re very involved in the community as well. But their commitment to their entire staff is what stands out to me. They really were focused on ‘How can we take care of our employees?’ ”
While many fine-dining restaurants had to scramble for creative to-go solutions, you could say Tutta Bella already had one baked in: Pizza is a hot commodity during the pandemic and it holds up well in delivery. Seeing revenue drop 80% in the first month, Fugere knew he had to act quickly.
“We were one of the first to apply. We were one of the first to be approved, and we were one of the first to be funded. It would not have happened with the previous bank,” he says.
The PPP loan was able to help him retain his 200-employee staff (he estimates most of them average 20 hours a week), and pay rent and bills for two months. With that covered, he was able to focus on ramping up the delivery aspect of the business, including a to-go business recently launched in regional grocery stores, and fine-tuning a much more limited take-out menu to better accommodate the new reality (Clam appetizers don’t necessarily work well as a takeout food). “We focused on salads and pizzas, and just wanted to be kind of narrow and deep and execute strongly in those two categories and desserts.”
Fugere is no stranger to SBA loans. He’s done several of them before, and he says the banking partner can make all the difference.
“If you find the right lender, they can make it happen,” he says.
At 1st Security Bank of Washington, we take a personal approach. We live in the communities we serve, so our branches are tailored to their communities. We believe that relationships make the difference, and that sets 1st Security Bank apart.