As the coronavirus pandemic’s economic impact came into sharp focus, hundreds of businesses, trusts, churches and nonprofits in Kitsap and North Mason counties were approved for emergency small business loans backed by the federal government, databases released on July 6 by the U.S. Small Business Administration show.
Among the largest recipients of Paycheck Protection Program (PPP) loans in the region: Kitsap Mental Health Services in Bremerton and Taylor Shellfish Company in Shelton, which were both approved for distributions of between $5 million and $10 million.
In the SBA release last week, approved distributions of more than $150,000 are reported in ranges and those under that line are identified without names, by business or organization type. Many, but not all, list how many jobs the funds would help to retain.
Funds were designed to help businesses retain at least 3,300 jobs in the region, according to those databases.
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Kitsap Mental Health CEO Joe Roszak said his organization received a $6.1 million distribution and that the vast majority of the money went to payroll. A final chunk of about $100,000 will be gone within the next week or two, he said.
“Individuals who were requiring services who refused to come in for service because they were fearful for their health and the health of others, it pretty much significantly impacted our operation’s ability to deliver services and revenue,” he said.
“The PPP, I know, was really essential to stabilizing our operations and allowed continuance of many of our services, and for that we’re grateful,” he said.
On Bainbridge Island, the environmental education center IslandWood received about $1 million, which allowed the nonprofit to bring back staff it had furloughed as events like retreats and school visits were canceled and other funding had dried up, CEO Megan Karch said. About 60% of the center’s typical staffing level of 100 people had been furloughed, but many were able to come back to work with the funding on redesigning education programs that could go online, she said.
IslandWood was transparent with staff that it was highly likely that they would be brought back only for a temporary period, and as the center recently finished off the pot of money, it had had to re-furlough employees and is now back down to about 35 staffers, Karch said. She anticipated about 70% of the loan her organization received would be forgivable.
“The environmental education industry is at great risk, frankly,” she said. “The Paycheck Protection Program money is a step in the right direction.”
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The information released last week provides a picture, albeit limited, of how the pandemic relief dollars flowed to local organizations and employees over the last few months. Nearly 400 groups were approved for funding distributions of more than $150,000, totaling somewhere between $118 million and $284 million. Nearly 3,000 groups were approved for smaller distributions up to $150,000, totaling $112 million.
Other large recipients include Peninsula Community Health Services, Watson Furniture, businesses for both the Suquamish and Port Gamble S’Klallam tribes, and Carpe Diem Pizza, a corporation run by a Seabeck couple who operate a handful of Domino’s Pizza location in Kitsap alongside a long list of other Domino’s locations around Puget Sound.
Loans are made and administered by lenders and guaranteed by the SBA. Kitsap Bank, one such lender, provided 900 loans totaling $107 million, Chief Lending Officer Steve Maxwell said in a statement to the Kitsap Sun.
Maxwell said the application process was challenging for both borrowers and lenders given the fluid and unfamiliar nature of the situation and said to date, there have been more than 20 "meaningful" updates to the PPP.
"The demand for this program was great and the origination process essentially required banks to develop a way to process an incredible volume of loans almost overnight," Maxwell said. "We had to essentially 'build a factory' overnight.
"In addition to the incredible volume, the fact that these loans were unlike any loans we have ever done was also a challenge. Rather than rely on the underlying capacity of the borrower to repay the loan, our process was one of evaluation of borrower eligibility and verification that the correct loan amount was applied for. So instead of looking at tax returns, rent rolls and construction budgets, we had to review documents that we typically don’t look at such as payroll records and wage reports. All this was done with incredible urgency as getting these loans out quickly was very important."
In Shelton, Taylor Shellfish was hit by the effects of the pandemic early on because of the company’s exports to China, and by mid-March, sales “dropped out altogether” with restaurants closed, company spokesman Bill Dewey said. At its low-point in mid-April, sales were at about 25% of what they were the year before and roughly 75% of staff were laid off, put on standby or had reduced hours, he said.
The company’s loan of around $5 million allowed it to bring back employees to do farm work at a critical point in the spring, he said. As of the end of June, the company was back up to around 530 employees, he said.
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“I don’t know that we would have made it without it,” Dewey said. “It was a desperate situation just like it has been for so many other businesses.”
PPP loan payments are deferred for six months and have a 1% interest rate but can be fully forgiven if the funds are put towards certain uses, like payroll, interest on mortgages, rent and utilities. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels, according to the SBA.
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The program resumed taking applications as part of an extension this week and a new deadline for applications is Aug. 8.
“It really saved our bacon, saved our business,” said Tag Kleiner, vice president of marketing for Far Bank Enterprises, headquartered on Bainbridge, which has four fly fishing-centric brands. With the company’s loan of around $2 million, Far Bank was able to immediately put 140 people back to work, he said.
Watson Furniture CEO Clif McKenzie said his company received around $2.8 million, which enabled it to resume manufacturing work and bring back employees it had furloughed. The Poulsbo business had around 225 employees, pre-pandemic, he said.
“In our case, and for most companies like ours, this program has been immensely beneficial, and I am quite grateful for it, warts and all,” he said, noting that he expected the loan to be 100% forgiven.
“We’re a company that’s always prepared and we have a strong balance sheet and all of that,” he said. “This stuff made a difference. I believe we are exactly the type of company that Congress is trying to support coming up on the other side and still have jobs.”
You can search a database of loan recipients here:
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Nathan Pilling is a reporter covering Bainbridge Island, North Kitsap and Washington State Ferries for the Kitsap Sun. He can be reached at 360-792-5242, nathan.pilling@kitsapsun.com or on Twitter at @KSNatePilling.
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