Banking Business February 2025

- Bryan Dennis, PSC Marine

“I think Heritage was the only bank that was willing to give me

Whitney

Creative

Erica Bolvin

Managing

Stephanie Neurer

Contributors

Kevin Conklin

Susan DeRenzo

Austin Patjens

Jonathan Phelps

Dave Purcell

John Stearns Cover

Jonathan Phelps

Olli Tumelius

I’m pleased to connect with you, our readers, as we embark on another journey together in 2025. Your continued support and engagement inspire us to push boundaries and strive for excellence in every issue.

At Heritage, we’re committed to fostering innovation, celebrating creativity and championing impactful ideas. It’s through this lens that we curate each article, interview and feature, aiming to spark thought-provoking conversations and provide meaningful insights for our business customers.

On page 2, you’ll read one of our most heart-wrenching customer stories to date. Bryan Dennis, founder of Puget Sound Composites (aka PSC Marine), shares his incredible comeback story from homelessness and addiction to businesses ownership.

We’re also excited to feature two new products: Builder Banking and MaxGiving. Builder Banking, while not a new concept, is designed specifically for builders and contractors. On page 23, you’ll learn about the benefits of partnering with a banker who specializes in financial solutions tailored to the construction industry.

For our nonprofit customers, we’re now offering an innovative software called MaxGiving by Elavon. From donation portals, giving days and giving campaigns, fundraising galas and charity golf tournaments to managing silent, live or online auctions, MaxGiving is designed to be a reliable, user friendly, intuitive and efficient tool for reaching your fundraising goals. Read more on page 22.

We also include additional tips and resources for businesses in the legal professional industry, a general guideline to applying for an SBA 7(a) loan, tips on creating a family code word in the event a scammer calls or texts claiming to be a family member needing money and which flower festivals to visit this spring.

As always, thank you for reading Banking Business and for choosing us as your banking partner.

Sincerely,

Bryan McDonald President and CEO

Bryan McDonald is president and chief executive officer at Heritage Bank. Bryan joined Heritage Bank in 2014 as executive vice president, chief lending officer. He has more than 20 years of managerial experience in sales, credit, operations, commercial banking and residential real estate. At Whidbey Island Bank, he served as president and chief executive officer from 2012-2014. He currently serves on the board of the Washington Bankers Association.

Welcome Nic Bley!

Help us welcome our new chief operating officer Nicholas (Nic) Bley! He joins our team with an extensive background in banking, including business development, sales operations, business systems analysis and financial/management reporting. Over the last 30 years, he’s worked in both support and leadership roles at two of the largest financial institutions in the U.S. We look forward to Nic bringing a fresh perspective and proven expertise to our executive team.

BEST BANK

Once Adrift and Alone, Everett Man Found His North Star in Life, Business and Community

By John Stearns

Onecould draw an analogy between Bryan Dennis’s boat repair and service business in Everett, Washington, and what he did to turn his life around.

“You can take something that was broken and make it whole again, and it’s a cathartic release to see that,” Dennis said of viewing the tangible results of hull repairs, engine overhauls or countless other repair and service jobs done by his company, Puget Sound Composites, also known as PSC Marine.

It was only eight years ago, in 2017, that Dennis was broken himself, adrift with literally nothing other than the clothes on his back and the few things he could carry in a gym bag. He was at the deepest point of a drug addiction that estranged him from friends and family, and nearly cost him his life—twice.

He credits God for his redirection.

Realizing he would be forgiven, he mustered the resolve to turn his life around. First, he got clean, then found employment. He began to save money and opened a secured checking account at Heritage Bank to begin rebuilding his financial life, too. He eventually landed a job at an Everett boat-repair facility that would open the doors to business ownership.

Today, when he looks at his reflection in a fiberglass hull he has refinished to a smooth, mirror-like finish, he takes pride in what he sees. The work is a bit like being a sculptor, he said of rebuilding the structure, matching the color and then meticulously applying the paint.

“It’s like a puzzle when you can restore it and look at yourself, and you’re facing that surface that you’ve just done. It’s kind of like what God did in my life,” he said. “And now that I feel like I restored my image the way God sees me, or I see myself, I kind of focus on the guys that I’ve got working with me. My vision for the future is to help people do that in their own lives.”

His immediate focus is PSC Marine and its customers, continuing to fine-tune and build a business that he launched four years ago and now has 10 employees. The shop’s work on pleasure and commercial crafts includes service and repair for composite, fiberglass, aluminum, wood and steel hulls; painting; detailing and finishing; welding, repair and fabrication of aluminum, stainless steel and steel; brightwork; rigging; electrical; and myriad mechanical repairs and services. PSC works on everything from six-foot dinghies to 110-foot vessels.

Dennis is building his business on core fundamentals of honesty and integrity—doing things right, not cutting corners. That applies to the physical work on boats and

interactions with customers, and it applies to the back-ofthe-house work of running a business by the book. Operating PSC Marine that way provides a rock-solid foundation that’s sustainable, he said.

“Really, the vision I have is to get the business sustainable so that we can have enough bandwidth to focus as much as possible on people,” Dennis said.

That means being there for his employees, but he also wants others to know that God is there for them, too, that there’s hope. He believes feelings of hopelessness are pervasive in society today, from addictions, relationship struggles, gambling problems, business pressures and more.

“The feeling inside that I had of hopelessness, I think is the same whether you’re a homeless, indigent drug addict or you are maybe a chief executive of a [company] and you feel like you’re about to lose your job, or you’re failing your stockholders and you’re thinking about taking your life,” he said. “The internal feeling is the same, and even though the contexts are different, the solution is the same, too.”

HIS STORY IS ‘AMAZING’

PSC Marine’s banker at Heritage, Staci Lindstrand, said Dennis’s story is one reason she got into community banking. “To overcome what he did to be where he is today is amazing and he is so completely humble; it is kind of inspiring, to be honest,” said Lindstrand, vice president and branch manager of the Everett office. “I think his perseverance, his commitment, not only to himself but to the company that he built is amazing. And to be able to watch that growth as a banker is one of the most rewarding things for me. It’s why

I’m in community banking is building those relationships and watching people grow.”

Lindstrand said it has been an honor for her to watch Dennis’s journey and see the success that he’s had.

“Honestly, it is truly just one of those once-in-a-lifetime stories where you connect with a business owner who just surprises you at every turn with their commitment and ability to overcome any obstacle that comes their way and remain positive and humble,” she said. “It’s amazing.”

Dennis started banking with Heritage in mid-2018, going there to cash his paychecks from a grocery store where he worked after treatment. Heritage offered him a secured checking account with overdraft protection and a chance to rebuild his credit.

Dennis, 39, traces his plunge into addiction to opioids after a teenage wisdom teeth extraction about 2004. The opioid pain relief medication seemed to reduce stress, fears and anxieties he felt at that age, despite his good grades, athletics and other activities. He had a full-ride scholarship to attend college, which added more pressure. He continued taking opioids for several years to feel better about himself, a trend that took over his reasoning as he sought more pills to have the same effects. Eventually, he tried different drugs and the downward spiral intensified. By the end, he had done every drug in every way, from cocaine in Columbia to heroin on the streets of Everett. He was revived twice from near-death overdoses.

“I didn’t have any shoes on my feet and was walking around in psychosis,” he said, the pain of the memory evident in his voice. “I weighed 110 pounds; I had forgotten who I was, who my family was. I didn’t really have any identity anymore.”

Photos courtesy of PSC Marine

In the pit of despair in 2017, walking a road in Everett, he approached law enforcement officers, admitted his addiction, that he had drugs in his possession and had stolen food to eat. They offered to help, including making appointments with doctors, buying him glasses to replace the ones he had lost, giving him gift cards for fast food joints and arranging lodging. They then got him to an inpatient facility, helped find transitional housing, then a job at a corner grocery store a couple blocks from his housing, where his mattress on the floor had a spring protruding from it. He mowed a nearby lawn in return for a bicycle to commute to drug-counseling sessions.

He began redirecting his path. He likened his previous life in drugs to a ship completely off-course, its compass at 180 degrees south. He started shifting his direction one degree at a time until his internal compass eventually swung 180 degrees and locked on his true north.

He saved whatever money he could, got plugged into a local church, raised enough money for a car, then landed a job at the Port of Everett, where he worked for a marine repair shop. He sought work there because he had a love of water and knack for boat maintenance and rebuilds that he learned as a youth with his boat-owning stepfather.

Working in the marine repair shop, he continued to save, grow and learn. He connected with customers who appreciated his work, including many who were successful business owners. He envisioned himself opening his own marine business someday. When the shop owner he worked for exited the business for health reasons, the door opened for Dennis’s dream. While he didn’t buy the business, he assumed its lease in the port and in 2021 began Puget Sound

Composites from scratch, winning customers for whom he had already worked while adding new ones.

Customers with their own businesses offered advice along his entrepreneurial journey. Heritage, too, offered counsel and the financial instruments to assist his navigation.

“They helped me to save and counseled me and encouraged me,” Dennis said, complimenting Lindstrand and others in the branch for their attention. “It’s kind of become like a family,” he said. “They’re people that I trust, and they’ve come down and looked at my operation; it’s been really fun giving them tours.”

Today, he has several Heritage accounts: business savings, credit lines and credit cards.

“They were instrumental in helping me rebuild my credit as fast as possible,” Dennis said. He was able to buy a house, his business is debt free and he pays off his credit cards monthly.

“I think Heritage was the only bank that was willing to give me a chance,” Dennis said. “That was what made the biggest difference for me. I think they’ve got a very competent, experienced staff; they answer the phone when you call; they are represented well in the region with locations and with ATMs; and they’re also very reasonable in their fees, just the structure of their accounts.”

Lindstrand said the bank has something akin to a “secondchance product” for people who’ve had previous banking issues, and Dennis made the most of his opportunity.

“I wish that you could bottle up that positivity and perseverance,” she said, “and I just think he could be such an encouragement to so many other people, but he has always

been just kind and humble and wanting to do the right thing and the best thing, and I think it’s taken him really far.”

Added Lindstrand, “We want the best for our clients, regardless of how they came to us. So, I think if I’ve learned anything from Bryan, it’s that if you don’t give up on yourself, no one else can take you down.”

She’s excited to watch Dennis’s journey, calling him strategic and measured with his growing business.

“I think if he continues on this path, there’s just no limit to what we’re going to see from him,” Lindstrand said.

GIVING BACK

Dennis is in a good place mentally, physically and spiritually. That includes being newly married; he and Shannon, a teacher at a private Christian school, wed in March 2024.

With his life solidly on course, he’s rewarded now by helping others, whether his PSC staff, tithing at his church, donating to the Sea Scouts, giving vehicles to single mothers or walking the streets of Everett to encourage people whose plight he understands.

Dennis was among 39 volunteer members of the Mayor’s Drug Crisis Task Force that was convened in February 2024

Everett Mayor Cassie Franklin to address the city’s drug problem. A city report on the task force’s work says, “Over the course of four months, the task force developed a shared understanding of the local drug crisis and its effects on community safety, culminating in actionable recommendations that encompass short-term interventions and long-term solutions aimed at mitigating the crisis and enhancing public safety. The final recommendations aim to improve public safety and support the City’s most vulnerable populations, ensuring a safer and healthier Everett for all residents.”

Dennis—living proof that support and services can have dramatic turnaround effects—wants to bring hope and help to others who are struggling. He knows the pain his drug addiction caused his friends and family in the past as they tried to help, but whom he drove away, leaving him to feel the full consequences of his poor decisions.

“When I was finally alone, I think that’s when I developed a relationship with God, because there wasn’t anybody else,” he said, adding that all his relationships have since returned to levels higher than they ever were. “But still, that primary hope that I have is not in my family, or my popularity, or my friends, or the wealth I now have. It’s in God.”

by

Olli

Tumelius

HERITAGE DIRECT

The Benefits of ACH Payments

ACH payments originated in the 1970s as a way to replace paper checks and streamline electronic transactions between financial institutions.1 The National Automated Clearing House Association (NACHA) was established in 1974 to govern ACH rules and ensure standardization. Initially focused on direct deposit of payroll and government benefits, the ACH system expanded to include bill payments, peer-to-peer (P2P) transfers and business-to-business (B2B) payments. Over the decades, technological advancements and regulatory updates have enhanced the speed, security and reach of ACH payments.

This electronic payment system offers numerous advantages over traditional payment methods. Let’s explore the benefits of incorporating ACH payments into your business operations.

Cost Savings

ACH payments are considerably cheaper than processing credit card transactions or issuing paper checks. These lower costs can translate into significant savings, particularly for businesses that process a high volume of payments.

Increased Efficiency

By automating payments through the ACH network, businesses can streamline their financial operations. Unlike paper checks, which require manual handling, printing and mailing, ACH payments are processed electronically. This reduces administrative tasks and minimizes errors, freeing up valuable time for your team to focus on other priorities.

Enhanced Security

Security is a top concern for businesses when it comes to financial transactions. ACH payments are governed by strict regulatory frameworks and feature robust fraud detection mechanisms. The ACH network uses encryption and authentication protocols to safeguard sensitive financial information, reducing the risk of data breaches and unauthorized transactions.

Improved Cash Flow Management

ACH payments provide businesses with greater control over their cash flow. With predictable processing times, businesses can plan their financial activities more effectively. In contrast, wire transfers, while faster, can disrupt cash flow management due to their high costs and lack of flexibility.

Eco-Friendly Alternative

Switching to ACH payments eliminates the need for paper checks, envelopes and postage, reducing your company’s environmental footprint. This eco-friendly approach can also enhance your brand’s reputation as a socially responsible organization.

Reduced Risk of Payment Delays

Mail delays, lost checks and manual errors can disrupt payment timelines and cause unnecessary stress. ACH payments eliminate these risks by ensuring funds are transferred directly between bank accounts in a timely manner.

Conclusion

Adopting ACH payments can provide your business with a host of benefits including cost savings, operational efficiency and enhanced security. Whether you’re looking to simplify your accounts payable process, improve cash flow or offer a convenient payment option for your customers, ACH payments are a reliable and effective solution.

If you have questions about the benefits of ACH for your business processes or you need help implementing these capabilities in Heritage Direct, reach out to your relationship manager.

1 www.federalreservehistory.org/essays/automated-clearing-house

Our Community Impact in 2024

In 2024, we achieved remarkable success in our corporate giving initiatives, demonstrating a strong commitment to social responsibility and community development. We contributed over $1.2 million to charitable causes, focusing on financial literacy, affordable housing, small business development, environmental sustainability and more. Our philanthropic programs reached underserved communities, empowering individuals with resources and opportunities to thrive. Learn more about our commitment at heritagebanknw.com/community.

$1,236,630 to 525 organizations

TOTAL HOURS VOLUNTEERED 5,723

EMPLOYEES PARTICIPATING 571

Skagit & Island Commercial Banking Team’s Community roots run deep

BY JOHN STEARNS

Mark Turner

Photographics

The five bankers who make up the Skagit/Island commercial team for Heritage Bank have deep-rooted connections to the northwest Washington communities they serve.

They have a combined 110 years with Heritage and Whidbey Island Bank, which Heritage acquired in 2014. That’s an average of 22 years per person.

“A lot of us were born and raised here, too, so we’re definitely committed to this area,” said Kurt Swanson, senior vice president-commercial banking team leader, who heads the group from Heritage’s Burlington office and was born and raised in nearby Mount Vernon.

He’s joined in the Burlington office by John Hanstad, senior vice president, and Matt Lehman, vice president. Hanstad was also born and raised in Mount Vernon, and Lehman grew up in Burlington.

The team’s other two commercial bankers are Krista Oicles, assistant vice president, and Megan Wise, senior vice president. Oicles works out of the Anacortes branch and serves San Juan Island from the Friday Harbor branch. Wise is in the Oak Harbor branch on Whidbey Island, which retained its Whidbey Island Bank name, as a division of Heritage, after the merger.

Wise leads the team in years with the organization, at 28. She’s followed by Hanstad, 27; Oicles, 21; Lehman, 19; and Swanson, 15. “We have a lot of tenure on this team,” Swanson said.

The team’s seven-person support team also has deep local connections. Four of them have between 15 and 19 years at the bank: Kathy Stevens, senior credit analyst; Barb Weymouth, regional loan production assistant supervisor; and Liz Harrison and Shelly Knapp, both loan production assistants. Other support staff are Mitchell Grant, Tej Chauhan and Heath Treichel, all credit analysts.

What’s all that time in market mean?

“We’re very dedicated to each of these communities,” Swanson said. “We spend a lot of countless hours volunteering our time. Matt and I do a lot of coaching and youth sports, and the others are very involved in serving on boards, whether it’s rotary, for church or other nonprofits out there. So, we’re dedicated to preserving that safety net within our communities but also very dedicated to doing projects that maintain the employment figures here or just promote the economic growth within each of these communities.”

Everyone cherishes the area, he said.

“It is very unique and there are so many different industries and types of customers that we have to be jack-of-all-trades to make sure we preserve that economic stability here,” Swanson said of the team.

Commercial business as diverse as the scenery

The Skagit/Island commercial team works with clients in industries that include farming, fishing, manufacturing, retail and restaurant and professional services. Skagit Valley is renowned for its tulip farms that blossom in spectacular color each spring, drawing tens of thousands of visitors to the region.

One of the office’s clients is a large bulb farmer. The bank also has financed vessels for clients out of Anacortes who fish the waters off Alaska. The team also works with a number of regional manufacturers and does a lot of commercial and industrial lending, Swanson said.

BUSINESS IN SKAGIT & ISLAND COUNTY BY THE NUMBERS

Major industries: Health care and social services, retail, administrative and support services, accommodation and food services

Major employers: Skagit Regional Health, Mount Vernon School District, Draper Valley Farms, Skagit County Government, Island Hospital, Janicki, Sedro Woolley School District

Labor force of 63,689 workers

Total of 5,881 businesses

#5 in dairy production in Washington state choosewashingtonstate.com/why-washington/ourregion/skagit-county/

ABOUT OUR SKAGIT & ISLAND COUNTY COMMERCIAL TEAM

Combined banker experience: More than 110 years

Volunteer hours served in 2024: 174 Charitable giving in 2024: $36,230

Top nonprofits: Skagit Regional Health Foundation, Skagit Valley Tulip Festival, Anacortes Rotary, Mount Vernon Public Schools Foundation, Boys & Girls Clubs of Skagit County

Check out the PNWonderland article on page 26 for a list of local flower festivals that you don’t want to miss!

CONTACT OR VISIT

There are several Heritage locations across Skagit and Island County. Visit heritagebanknw.com to find the one nearest you.

BURLINGTON

1800 S Burlington Blvd.

360.757.3416

Deanna Babington, Branch Manager

ANACORTES

2202 Commercial Avenue

360.299.3007

Liz Svoboda, Branch Manager

OAK HARBOR

450 SW Bayshore Drive

360.675.5968

Marcia Fakkema, Branch Manager

The team’s largest deals tend to be owner-occupied commercial real estate for local businesses.

Among the Skagit/Island team’s 2024 loans, Lehman led a deal to help a mainstay Mexican restaurant finance the purchase of its building after many years leasing. The project will utilize the Small Business Administration’s 504 program.

Wise led financing for the acquisition of the business and real estate for a local craft distillery on Whidbey Island using a combination of SBA 504 and SBA 7(a) loan products to complete the package. Austin Patjens, a Heritage SBA business development officer in Tacoma, and Rob Mellish, branch banking area manager for Island County, also assisted in the deal.

Hanstad secured a $5 million guidance line of credit for a contractor for equipment purchases. And in December, he finalized a Washington State Small Business Credit Initiative (SSBCI) loan to purchase an office building with improvements for a local medical practice. SSBCI provides capital to small businesses and nonprofits primarily in underserved and underbanked communities.

Swanson completed a deal for a ground-up construction project for a local landscaping company that utilized financing through the Heritage Bank Community Development Entity, or HBCDE, loan program, which finances businesses in economically distressed areas with better rates, terms and more flexibility

Hanstad and Swanson assisted the bank’s Yakima commercial team with a municipal bond that will fund a solar project for a local school district. Municipal lending is one of the team’s niches. The group supports all the municipal lending bankwide, including in Oregon and Idaho, and helps facilitate underwriting, Swanson said.

“That’s been kind of my main area of expertise for the bank over the years,” he said. “We haven’t done a high volume of it in the past few years, but over the past 10 years we’ve done quite a bit of that.”

Broad community buy-in

Swanson enjoys his team and the members’ stability, knowledge and willingness to help the communities they serve.

Lehman, for example, has coached baseball, basketball and football and is the booster club president for Burlington-Edison High School’s football program. He’s been involved in the Burlington Mid-Day Rotary, Skagit Community Foundation and Skagit Valley Hospital Foundation over the years.

Hanstad has served as a board member of the Economic Development Board of Stanwood, Stanwood-Camano Kiwanis Club, Conway School District, Community Action of Skagit County, Children of the Valley and Bethany Covenant Church.

Wise serves on the boards of the WhidbeyHealth Foundation and Oak Harbor Main Street Association as well as the finance committees of the Whidbey Community Foundation and Island County Historical Society.

Oicles has been heavily involved in Rotary Club of Anacortes since 2009 and previously served on the Island Health Foundation board.

Swanson has coached basketball and baseball in local AAU and Skagit County Parks and Recreation programs and has been treasurer for the Mount Vernon Public Schools Foundation for the past eight years.

Responding to his team’s widespread community involvement, Swanson said, “It’s a community bank, so we need to live it firsthand, just helping the communities, whether it’s volunteering or just financing the projects that help it economically.”

What’s wrong with now?

Finance with us and, if interest rates fall within 24 months, request a one-time rate reduction of up to 1.25%.*

Our innovative solutions can help you finance owner-occupied real estate properties at competitive interest rates and loan terms. So why wait to purchase or refinance?

• Loan amounts of $1,000,000—$10,000,000

• 12-month interest-only period

• Competitive fixed interest rate

• Easy application process and local, timely approvals

Scan the QR code for more information on this limited-time offer and to connect with a banker near you.

YOUR SUCCESSION TOOLKIT, PART 2 Valuing

This is the second in a three-part series of articles on succession planning. Look for part one in the October 2024 issue of Banking Business and part three in an upcoming issue.

SSuccessfully exiting a business is a dream for many owners. A financially-sound exit is certainly achievable, but it requires a period of hard work and planning to get the best return. We’ve assembled critical actions you can take to increase the value of your business before you offer it for sale.

Add value to your business

01 Increase the value

Don’t focus on building a business you can exit. Instead, focus on building a successful one that you will exit when you’ve decided.

By increasing your business’s value with continuous growth, a reliable revenue stream and a large customer base, it will become more attractive to potential buyers. The best outcome is to be approached by a buyer, putting you in the driver's seat when negotiating price.

02 Get the best price

In order to facilitate a quicker sale and get top dollar you’ll need to take steps early to make sure your business attracts an eager buyer.

• Show your business has been profitable for several years with accurate historical financial information.

• Forecast that the business future looks better, with a growing industry and positive trends.

• Have your tax records in order.

• Know your customer acquisition and retention rates.

• Have multiple revenue streams with a wide range services or products to distribute risk.

• Start “replacement planning”—training your successors and locking in staff through loyalty incentives.

• Offer financing terms.

Another excellent way to make your business appealing to a buyer is to create transferable value—in other words, ensuring your business is "turnkey". You can do this by creating effective systems for management, sales, production and administration so your business can function seamlessly without you. Create an operations manual that documents all processes in simple, easy-to-understand steps.

Be realistic about the sale price. Many owner-managers have an inflated idea of the true value of their business. If you cannot articulate why someone would buy your business, you are likely to struggle to sell it.

03 Optimize your business for sale

Getting the best price may require a bit of preparation to make sure your business is in top shape. Potential buyers will also want also to know why you’re selling, especially if you’ve advertised what a great business it is.

• Forecast your expected net profit over the coming year so you can determine how healthy your business is. Then you can take steps to improve it, making it more attractive to potential buyers.

• Try to show stable cash flow through the year. Delay or bring forward major purchases to help achieve this objective.

• Improve your working capital position by selling under-utilized equipment and assets. Efficient stock management and tighter credit control will also improve working capital.

• Improve customer loyalty—you want to be able to reassure buyers that customers will stay. Focus on improving your customer experience so they keep coming back.

• Make sure your systems and processes meet a high standard and are well-documented.

• Make your systems transferable—that’s what buyers are truly paying for. Buyers will see more value in your business if you have good systems they can step in and run without you.

• Use the latest software, processes, applications and methods to position your business as a leader in the industry.

04 Clean up accounting records

For business owners, identifying the most tax-efficient methods to receive income from a business starts early and continues right up to the date the business is sold. The expertise of advisors such as financial planners, accountants, lawyers, bankers and wealth management experts can have a significant impact on the financial results you achieve personally over your lifetime.

Are your accounts up-to-date and accurate?

Having them in order will help maximize your business’s value. You’ll want your accounts to show a organized and productive business.

05 Polish up your business

Paint what needs to be painted, fix anything that’s broken and repair or replace damaged assets.

The goal is to get your business environment looking clean and sellable. If you need extra funding to get your business up to standard, speak with your banker.

Make sure any legal or tax issues are settled. You’ll want to market a problem-free business.

You should be able to explain any unusual items such as discontinued operations (like recently shutting down a unit) or a change in accounting principles, so everything is transparent for potential buyers.

06 Prepare a confidentiality agreement

You’ll have to let a buyer look deeper into your business as part of the due diligence process. Have potential buyers sign a confidentiality agreement before you share sensitive company information such as financial reports. News that your business is for sale could lead to negative reactions from your customers, suppliers, creditors or staff. If competitors find out, they could react aggressively. So add in clauses for non-disclosure of the selling process.

You can also release information in stages: all inquiries receive a one page outline, qualified buyers receive more detail including average financial data, and the one (or if you’re lucky, two) buyer(s) receive full disclosure.

07 Lock in long-term customers

Customers are the lifeblood of most businesses, so secure long-term contracts with regular customers to help increase the perceived value of your business. Consider moving customers to a subscription model to demonstrate strong, recurring revenue to a buyer.

08 Lock in your lease

Make sure leases have been formalized in a way that’s acceptable to you and your likely buyer. Make sure the landlord agrees to transfer the lease to a new owner. It pays to properly handle the transfer of the lease to your buyer because it’s an integral part of selling a business and can be a deal breaker.

How to calculate a price

01 Assets resale value only

Sometimes a business is only worth its net assets and what they might sell for. This tends to happen if the owner is integral to the operation and the business may struggle to get new clients if the owner retires. This is also the case when the business hasn’t been generating a profit and the future is uncertain or a lease or contract has expired and there is no possibility of the business continuing.

List all your fixed assets like property, vehicles, equipment and furniture and calculate how much they could be sold for on the open market.

Your Succession Toolkit, continued next page

02 Assets plus goodwill

This is probably the most popular way of working out what a business is worth. It’s relatively straightforward: you add up all your physical assets such as stock, raw materials, assets, accounts receivable or cash in the bank. Then subtract any liabilities, such as money owed to others, and possibly any taxes owed if someone is buying the company shares. This gives you your net asset value.

Then you add on goodwill, which is an extra sum of money for someone to take over a business that has customers, staff and systems already in place. Buyers pay this extra amount over and above the physical assets for these benefits if you have:

• Great relationships with customers and suppliers that will continue after the sale.

• Protected intellectual property that gives your business an advantage in the marketplace.

• A terrific business location with a long lease.

• Good cash flow and little or no debt.

• Documented business systems and processes a new owner can pick up.

• Loyal, knowledgeable and experienced staff who’ll stay on after the sale.

03 Earnings valuation method

Some industries have ‘profit multipliers’ where you multiply past earnings by an accepted industry number. This sounds unscientific but there are industry multipliers where you look at the average of past profit (say $100,000/year) and then multiply this by the accepted industry number. Past earnings are used to determine an expected cash flow level, which is then used to predict a sale price.

04 Market value

This method compares your business to others that have sold recently, particularly if they were a competitor. The main problem is that, similar to house buying, the price isn’t dictated by the actual value but by demand. If similar businesses in a similar industry are selling at price ‘x’, it doesn’t mean yours should. Your business could have better clients, products, staff and future opportunities.

It’s worth having a discussion with a broker, your accountant and other qualified business advisors to get an understanding of what similar businesses to yours with similar revenue and profit are selling for.

What buyers want

Potential buyers are searching for businesses that provide an ongoing expected return for their investment risk. A buyer with $500,000 in cash could leave it in a savings account, invest in other opportunities or invest in your business. It’s critical you work through a process of getting every aspect of your business in the best possible shape to attract the right buyer. Make sure you:

• Tidy up your financial records. Taxes should be paid and debts should be settled.

• Optimize levels of staff and inventory, which shows your business operates efficiently.

• Tighten control over debtors. You want them paying on time or early, if possible, to help show that cash flow is predictable.

• Resolve any legal issues. A new owner doesn’t want to inherit legal problems.

• Replace or repair outdated or broken assets such as equipment.

• Have set processes. A potential buyer will want to see clearly defined processes for daily operations.

Ideally, you'll want to have your business valued by more than one person as it’s possible to reach different results with these valuation methods

PCollaborating & Partnering With Other Businesses

Partnering with other businesses to pursue common goals is growing in popularity as a smart way to increase capability, share resources, reduce costs and mitigate risks. The internet, subcontracting and access to talent from around the world has made this even easier.

Partnering with other businesses can be formal (a contractual obligation), informal (referring work to each other and verbal agreements), significant (sharing suppliers and long-term customers) or ad hoc (coming together project by project).

The collaboration opportunity

Working with other businesses helps you share the responsibility of providing resources or support if needed. It also provides you with colleagues who you can work with, rely on and trust in the event of an emergency or just general day-to-day questions.

Here are some ways that collaborating with other businesses can benefit you:

• Access to new product/service lines by selling another company’s products/services, saving you research and development costs

• Access to new markets where the partner sells or distributes your products and services to their customers

• Block competition by referring business to one another

• Reduce costs by sharing resources or staff or gaining volume purchase discounts

• Enhance capacity to bid on larger contracts by being able to offer broader, more comprehensive services

• Strengthen customer relationships by being able to better serve their needs

• Strengthen supplier relationships by bulk ordering

• Outsource production

• License the intellectual property of a partner to use in your business or vice versa

• Access to new business models and ways of selling

Making the best use of available skills

A collaborative environment makes a range of disciplines accessible on an as-needed basis, which leads to the efficient use of employee talent in a way that isn’t possible otherwise.

Collaboration allows multiple individuals to participate in the completion of a task, making it more likely that the right talent is available at the right time. With collaboration, tasks are completed more efficiently, leaving more time for staff to concentrate on activities that contribute to company growth.

Collaboration also allows a business to:

• Dedicate specialized resources to a problem, which may mean a solution is identified more quickly and more cost-effectively than would be possible otherwise.

• Share resources such as equipment or assets that may only be needed for a short-term project.

• Maximize organizational potential by allowing employees with different skills to leverage individual knowledge, strengths and capabilities.

• Build industry-specific knowledge.

• Create learning opportunities.

Finding the right partner

Take care to identify which type of business (and person) would be the ideal alliance. Thoroughly research and evaluate all potential partners and seek out companies that share your business ethic, strategy and expectations of working together. Formalize any collaboration with a clear written agreement that spells out roles and responsibilities, such as who looks after the customer relationship, how profit is shared and who owns what (especially intellectual property).

Collaborating works best when each party feels they’re getting a synergistic benefit and are able to achieve an outcome that isn't possible on their own.

Decide if collaborating will work for your business, identify what outcomes you’re after, find those businesses that match and then make contact.

Making Cash Flow Count with Tax-Smart Strategies

When it comes to managing your finances, even small decisions can make a big difference. By understanding your cash flow and approaching it with a strategic, tax-intelligent mindset, you can make your money work harder for you and move closer to your long-term goals.

Cash Flow and How to Calculate It

Cash flow refers to the movement of money into and out of your accounts over a specific period. It reflects how much income (cash inflow) a person receives compared to how much they spend (cash outflow) on living expenses, debt payments and other financial obligations.

To calculate your cash flow, follow these simple steps:

1. Calculate your total income from all sources (salary, investments, passive income, etc.).

2. Add up all your expenses (including fixed costs like rent and utilities and discretionary spending like entertainment or travel).

3. Subtract your total expenses from your total income. Here’s a quick formula to summarize:

Net Cash Flow = Total Income - Total Expenses

For easy tracking, consider using budgeting tools or apps that can automatically calculate cash flow. Monitoring this movement regularly can help you understand spending trends, identify savings opportunities and explore how taxsmart adjustments could potentially enhance cash flow over time.

Why Tracking Cash Flow Matters

Tracking cash flow is about more than balancing your accounts; it’s about understanding your finances to make informed, strategic choices. Tracking your cash flow can help:

• Keep goals in focus: Tracking cash flow helps you manage income and spending with your financial goals in mind, enabling you to channel funds effectively for big objectives, like home purchases, retirement or saving for education, while maintaining tax-smart allocations.

• Optimize for tax-saving opportunities: Strategic cash flow planning allows you to seize tax-saving opportunities, like maximizing retirement contributions, funding HSAs or timing deductions effectively—keeping more of your wealth working toward your goals.

• Reveal financial patterns: By knowing where your money comes from and goes, you can identify areas for improvement and recognize opportunities to reduce tax liabilities, like maximizing allowable deductions.

• Improve debt management: A grasp on cash flow enables you to make debt payments strategically, prioritizing high-interest or non-deductible debt that doesn’t contribute to your tax picture, freeing up cash to allocate toward growth.

Tax-Smart Allocation: The 50/30/20 Rule

Once you have a clear understanding of your cash flow, consider applying the 50/30/20 rule to guide spending and savings in a tax-intelligent way. This rule suggests dividing after-tax income as follows:

• 50% for needs (housing, food, utilities)

• 30% for wants (entertainment, dining out, hobbies)

• 20% for savings (emergency fund, investing, retirement)

By directing the savings portion to tax-advantaged accounts like a 401(k), IRA or HSA, you may reduce taxable income while working toward long-term goals. This approach allows you to allocate funds for both short-term expenses and longerterm growth opportunities that could reduce your tax liability.

Work With an Advisor to Create a Plan

Cash flow management is valuable at every life stage, and a tax-intelligent approach can significantly enhance the benefits. A financial professional can provide insights that support your personal situation and help develop a tailored strategy to optimize cash flow and maximize tax advantages. Working with a professional allows you to:

• Assess your current cash flow and find opportunities for improvements.

• Create a customized savings and investment plan that incorporates potential tax benefits.

• Adjust the plan regularly to stay aligned with changing financial goals and tax regulations.

• Explore advanced tax-planning strategies that can help build and preserve wealth over time.

The goal is to create a balance that lets you enjoy life today while moving confidently toward long-term goals with taxintelligent planning in place.

Making Excess Cash Work for You: Four Tax-Intelligent Strategies

Managing your cash flow can reveal opportunities to put excess cash to work in ways that both align with your goals and maximize tax savings. Consider the following strategies:

Save and invest in tax-advantaged accounts.

Direct surplus cash toward tax-deferred or tax-free growth accounts, such as high-yield savings, IRAs or HSAs. This allocation can help you build wealth and secure a more favorable tax position over time, especially for long-term growth through interest, dividends or market appreciation.

Accelerate debt repayment.

Use excess cash to pay down high-interest, non-deductible debt (e.g., credit cards). Lowering this debt can free up cash to invest in tax-advantaged accounts or apply toward deductible interest payments, potentially boosting your tax savings and overall financial flexibility.

CONTRIBUTOR: SUSAN DERENZO, CFP®, CTFA, VP, CERTIFIED FINANCIAL PLANNER

Susan has been helping her clients achieve their financial dreams for over 20 years. During her tenure, she’s come to enjoy working with soon-to-be retirees as they transition into the next chapter of their life. She instills confidence as she takes on the task of organizing, planning and managing their money. Susan covers our Columbia & Central Valley regions, which includes branches located in: Toppenish, Union Gap, Yakima, Vancouver and Longview.

Contribute toward a current or future home.

For homeownership goals, allocate excess funds to save for a down payment, potentially securing better mortgage terms. If you already own a home, extra payments build equity faster, providing flexibility for future needs like refinancing, which can help lower monthly payments and free up cash for other tax-smart uses. Make tax-smart donations or purchases.

Donating to qualified charities can provide deductions while also having a positive impact on causes you care about. Additionally, tax-crediteligible purchases, like solar panels or electric vehicles, may offset taxable income.

Heritage Wealth Strategies is a marketing name of Cetera Investment Services. Securities and insurance products are offered through Cetera Investment Services LLC (doing insurance business in CA as CFG STC Insurance Agency LLC), member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Neither firm is affiliated with the financial institution where investment services are offered. Investments are: *Not FDIC/NCUSIF insured *May lose value *Not financial institution guaranteed *Not a deposit *Not insured by any federal government agency. 1000 SW Broadway, Suite 2170, Portland, OR 97205, (888) 360-0052.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.

INDUSTRY PROFILE:

Legal Professional Services

Resources

American Bar Association www.americanbar.org

National Bar Association www.nationalbar.org

International Bar Association www.ibanet.org

National Association of Women Lawyers www.nawl.org

International Association of Young Lawyers www.aija.org

The legal services industry encompasses a range of professionals, including attorneys, legal consultants, paralegals, legal analysts and various support staff. Legal professionals rely on expertise, reputation, ethical practices and strong client relationships to establish a competitive edge in a crowded marketplace. Law firms and other legal services are continually evolving to address new challenges, shifting regulations and technological advancements in the field. Lawyers and law firms are governed by various legal bodies both within the United States as well as internationally. Key associations include the American Bar Association (ABA), National Bar Association (NBA) and the National Association of Women Lawyers (NAWL). Internationally, governing bodies such as the International Bar Association (IBA) provide global guidance on legal practice standards and ethics.

Success characteristics

Achievement in the legal field often depends on providing highly customized services that address specific legal needs, backed by extensive knowledge and a personal rapport with clients. Common characteristics include:

• Vigilance in tracking regulatory changes and adapting to new legislation to make sure their clients remain compliant.

• Publishing thought leadership pieces on social media, providing insights into legal trends and developments, which enhances credibility and client trust.

• Expanding service offerings through partnerships with complementary professional services, such as forensic accountants or cybersecurity firms, allowing law firms to offer comprehensive legal solutions.

• Membership in bar associations and legal organizations as they help legal professionals network, learn and stay informed about industry updates, compliance requirements and legislative changes.

These strategies help law firms build strong client relationships, stay competitive and provide exceptional, wellrounded legal services in an evolving landscape.

Challenges

The legal profession faces unique challenges in today’s rapidly changing environment.

• The traditional law office environment is shifting, with many firms exploring hybrid setups that blend in-office presence with remote work to meet employee and client expectations.

• Legal firms handle sensitive client data and must deploy robust cybersecurity measures to prevent data breaches. As cyber threats increase, law firms need sophisticated digital security frameworks that comply with regulatory guidelines.

• The legal profession is highly competitive and attracting top talent has become challenging, especially as younger attorneys seek better work-life balance and remote work opportunities.

• Legal firms must assess and adopt software that can improve case management, client communication and back-office processes, enabling teams to work more efficiently and effectively, whether in-office or remotely. These challenges require law firms to continuously adapt and innovate in order to maintain a competitive edge, protect client data and meet the evolving needs of both clients and staff.

Trends impacting legal services

Like all professional services, the legal sector is susceptible to shifting trends and an evolving landscape.

Increased use of automation and artificial intelligence (AI)

AI is having a significant impact on many industries, and the legal profession is no exception. AI, along with automation, is becoming central to many legal processes, from document review to legal research. By streamlining tasks such as legal discovery and reducing repetitive work, AI-driven tools significantly improve efficiency in case preparation. This adoption of technology helps legal professionals focus more on strategic and complex tasks, enhancing overall productivity.

Remote and virtual law firms

Another significant trend is the rise of remote and virtual law firms, which have minimal or no physical office space. These firms leverage digital tools to provide legal counsel and collaborate with clients remotely, leading to reduced

overhead costs and greater flexibility for both clients and staff. This model is increasingly appealing in an era where mobility and virtual connectivity are key.

Alternative fee structures

In response to client demands for greater transparency and predictable costs, alternative fee structures are becoming more popular. Traditionally, legal services were billed by the hour, but a shift toward value-based billing now allows clients to pay a fixed monthly fee for ongoing support. This approach aligns with modern client expectations for fairness and accountability in billing practices.

Focus on cybersecurity and data privacy

With legal firms handling highly sensitive client data, there is an intensified focus on cybersecurity and data privacy. Firms must adhere to strict data protection laws, such as the General Data Protection Regulation (GDPR) for international firms or the US Privacy Act within the United States. Cybersecurity is a top priority for legal services as digital threats grow more sophisticated, necessitating robust protections for client information.

Globalization of legal services

As cross-border transactions and cases become more common, many law firms are expanding internationally or forming partnerships with foreign firms to offer comprehensive legal support on global matters. This trend reflects the increasingly interconnected nature of business and the need for legal expertise across multiple jurisdictions.

Diversity, equity and inclusion (DEI)

These initiatives are gaining momentum within the legal profession. Prominent legal organizations like the ABA and IBA advocate for more inclusive practices within law firms. This push for DEI is driven both by regulatory pressure and the profession’s recognition of the value of diverse perspectives, making equity in the workplace a priority across the industry. The legal profession is navigating an era of profound change, shaped by technological advancements, shifting client expectations, and evolving regulatory landscapes. Law firms that embrace innovation, adapt to hybrid work models and prioritize cybersecurity and data privacy are better positioned to thrive in this dynamic environment. By leveraging automation, adopting alternative billing structures and focusing on diversity and inclusivity, legal professionals can provide more efficient and client-centered services.

Ultimately, the future of legal services will hinge on a commitment to continual learning, adaptability and ethical responsibility.

Maximize Your Mission by Maximizing Your Fundraising Efforts

Fundraising is the lifeblood of any nonprofit organization, enabling you to fulfill your mission and create a meaningful impact in the community you serve. It provides the necessary financial resources to support programs, services and operational needs, ensuring sustainability and growth. Beyond finances, fundraising fosters connections with donors, volunteers and stakeholders, cultivating a sense of shared purpose and commitment. It also raises awareness about your goals and initiatives, amplifying your reach and influence. Effective fundraising empowers nonprofits to tackle pressing social issues, innovate solutions and bring about lasting change.

To help with your fundraising needs, Heritage is now offering innovative software called MaxGiving by Elavon. From donation portals, giving days and giving campaigns, fundraising galas and charity golf tournaments to managing silent, live or online auctions, MaxGiving is designed to be a reliable, user friendly, intuitive and efficient tool for reaching your fundraising goals. It’s built on a scalable cloud computing platform with world-class security to protect the data and respect the privacy of your sponsors and donors.

MaxGiving’s team of experts walk you through the process of setting up a donation portal or giving campaign; customizing graphics and logos to showcase your brand; and uplifting your sponsors with an optional giving thermometer to provide encouragement to your donors along the way to reaching your goals.

Features include:

> Silent & live auction

> Mobile bidding

> Giving campaigns

> Embedded live-video streaming

> Fully customizable & CSS capabilities

> Multiple auction close times

> 5 Item images with Zoom

> Raffle tickets & sign-up parties

> Printable resources

Reach out to your Heritage banker if you’re ready to maximize your fundraising efforts!

BUILDER BANKING

Let’s build success together.

In the highly specialized and dynamic world of construction, builders and contractors face unique challenges—from managing fluctuating material costs to maintaining steady cash flow for labor and project execution. Collaborating with a banker who specializes in financial solutions tailored to the construction industry can provide significant advantages. Here’s a closer look at why partnering with such a professional is a smart move for builders and contractors.

Industry-Specific Expertise

A banker with a focus on construction understands the nuances of the industry. They are well-versed in the cycles of construction, the importance of payment schedules and the challenges posed by delayed receivables. This knowledge allows them to offer financial products and advice that align with your business operations, whether it’s structuring a line of credit to cover short-term cash flow needs or securing equipment financing.

Tailored Financial Solutions

Standard banking solutions often fall short of addressing the unique needs of builders and contractors. A specialized banker can craft customized financing options, such as:

• Construction loans

• Lines of credit

• Equipment financing

• Bonding assistance

These tailored solutions can make the difference between meeting deadlines and facing costly delays.

Improved Cash Flow Management

Cash flow is the livelihood of any construction business. A specialized banker can help implement strategies to manage it effectively, ensuring that operational expenses, such as payroll and materials, are met without disruption. Tools like invoice financing or progress payment loans can provide immediate liquidity when client payments are delayed.

Access to Strategic Insights and Connections

Beyond financial products, a specialized banker often has a network of industry contacts and can provide valuable insights into market trends, regulatory changes and best practices. This added value can help builders and contractors make informed decisions and adapt to changing circumstances.

Long-Term Partnership for Growth

A banker who understands your business isn’t just a service provider; they’re a strategic partner. They can anticipate your financial needs as your business grows and proactively offer solutions to support expansion. Whether it’s acquiring new land, scaling operations or investing in innovative technologies, a long-term relationship with a specialized banker ensures your financial strategies evolve with your goals.

Faster Decision-Making

Specialized bankers often have experience in navigating complex financial scenarios unique to construction. This enables them to expedite decision-making processes, ensuring that loans, credit lines or other financial tools are approved and deployed quickly when you need them most.

Conclusion

In the competitive and fast-paced construction industry, having a financial partner who truly understands your needs can provide a significant edge. A banker specializing in financial solutions for builders and contractors offers tailored products, expert advice and a deep understanding of industry challenges. By forming a partnership with such a professional, you’re not just accessing financial services; you’re equipping your business with the tools and support needed to thrive in a complex and ever-changing environment.

CONTRIBUTOR: KEVIN CONKLIN

Kevin is Heritage Bank’s new director of builder banking with over 26 years of experience in the banking and financial services industry. As the director, Kevin specializes in providing tailored financial solutions for commercial construction clients and facilitating the development of major construction projects, with a focus on professional homebuilders throughout Seattle, Portland and Boise.

Your Guide to the SBA’s General 7(a) Business Loan

The 7(a) loan is the most common of all the SBA’s loan programs as it can be used for a variety of business purposes, including short- and long-term working capital, purchasing real estate or machinery, business start-up and growth and buying a business, to name just a few.

It’s because of its flexibility and wide range of business reasons that this loan is the most popular. A business can borrow up to $5 million and the SBA will guarantee up to 85% to the lender.

It's important to remember that you're not borrowing from the SBA itself. The funds are still coming from your financial institution, but the SBA will guarantee a certain amount of the loan to the lender.

Eligibility

The key factors are based on what your business does to make money, the character of the business ownership and where it’s located.

Although the SBA will look at each business on a caseby-case basis, and given that you still need to meet your financial institution's requirements for an SBA-guaranteed loan, there are some elements that are common for all applicants that include:

• The business must operate for profit

• Be defined as “small” by the SBA

• Have reasonable equity invested

• Have used alternatives to borrowing, such as personal assets

• Demonstrated a legitimate need for the funds

Reasons for the loan

Short and long-term working capital needs are among the most common, including:

• Acquiring, refinancing or improving real estate and buildings.

• Refinancing current business debt.

• Purchasing and installing machinery and equipment, including AI-related expenses.

• Purchasing furniture, fixtures and supplies.

• Changes of ownership (complete or partial).

DID YOU KNOW?

Heritage Bank is an SBA preferred lender allowing for additional assistance and timelier financing for businesses.

The maximum loan amount for a 7(a) loan is $5 million. Key eligibility factors are based on what the business does to receive its income, its credit history and where the business operates. Your lender will help you figure out which type of loan is best suited for your needs.

Because the SBA has specific purposes in mind, they also have some that mean you won’t qualify for the loan. For example, if you're planning to refinance an existing loan, the restrictions and requirements are strict.

Ineligible businesses

There are certain kinds of businesses that the SBA views as ineligible for their 7(a) loan program. For instance, if you’re in the business of lending money yourself like a pawn shop then you won’t qualify for an SBA loan. The same is true if your business is focused on religion or politics, or if you as the owner are currently incarcerated, on parole or probation or have been named as the defendant in criminal proceedings.

The SBA takes a very dim view of those with criminal histories and anyone who’s habitually delinquent with debts or who’s been repeatedly turned down for loans in the past.

The application process

There’s no getting around it—you need to be prepared for paperwork. Although the SBA is streamlining their application process, it can still take some time.

There’s a fair amount of documentation you’ll need to provide. In order to be as prepared as possible, the SBA has put together a checklist, which you can access on their website. It’s vital that you review this and gather all the documentation required, then go through the checklist with your bank to make sure you haven’t missed anything. The documentation also includes several forms you’ll need to fill out. Mostly what they’re looking for are details around your personal background and financial statements. When it comes to the latter, it’s a good idea to fill those forms out with your banker or accountant.

Repayment terms

Depending on what the loan is for, there are some maximum maturities:

• Real estate: 25 years

• Equipment: 10 years

• Working capital: 7 years

Like most bank loans, you make repayments on the principal and interest monthly. You may be able to negotiate interest-only terms during your business’s start-up and expansion phases.

The expectation is that every 7(a) loan is fully secured, but the SBA won’t necessarily turn you down if you don’t have enough collateral. If all other aspects of your application are in order, they’ll generally ask that you pledge all the collateral you have available.

Next steps

If you’re looking for a loan to help you finance start-up or expansion or to increase your working capital, purchase real estate or equipment, then the 7(a) loan is your best bet. Confirm this with your lender and work through your eligibility and the application process with them. Visit the SBA’s website at sba.gov to compare their various loan options and explore resources. Then, contact one of our SBA experts. We are a preferred SBA lender, which means we can help borrowers get the funds they need faster than a bank that does not have that classification. Our experts will spend time with you and help you understand the right solution for your business. It’s true, the SBA can be a long process, but to help your dream come true, it’s well worth the time.

CONTRIBUTOR: AUSTIN PATJENS

Austin has been in banking since 2005 and joined Heritage in 2015. Prior to his current position, Austin has held positions in retail banking, merchant card services, special assets and commercial lending. Austin is the SBA lender for Heritage Bank’s Washington footprint, where he seeks to help educate and advocate for small businesses and SBA lending programs.

Vecteezy

Spring Into Color at These Northwest Flower Festivals

Right about the time we start craving the sunshine’s warmth, the flowers in the northwest are getting the same idea. After spending the chilly winter hibernating and storing energy, bulbs and flowering trees are ready to put on a show and the Pacific Northwest is awash in color from April through July. Pack your camera, put on your garden boots and check out these flower festivals to cure your spring fever.

Skagit Valley Tulip Festival, Mount Vernon, WA

Every April, the Skagit Valley, about 60 miles north of Seattle off I-5, celebrates the largest tulip festival in the country. According to the Washington State University Master Gardeners Program, approximately 1,000 acres of tulips and daffodils are grown and about 20 million bulbs are harvested each summer in Skagit County. You’ll want your camera as you wander dozens of acres of display gardens at four grower locations, take a farm tour and purchase flowers and bulbs. Local wineries, breweries, restaurants and shops join the festivities with tours, tastings, performances and demonstrations. Attend English Tea at Willowbrook Manor (every Friday and Saturday in April), bring the whole family to watch the La Conner Tulip Parade or enjoy a wild salmon BBQ put on by the Mount Vernon Kiwanis Noon Club (April 25-27). Visit on a weekday if your schedule allows; weekends can be busy. No drones are allowed, and parking is free at all four gardens. Visit tulipfestival.org to purchase tickets, check the bloom status and view the interactive map.

Wooden Shoe Tulip Festival, Woodburn, OR

The Wooden Shoe Flower Farm’s tulips bloom from late March until early May, and they generally expect the best overlap of color in mid-April. Though every year is different as their tulips bloom based on growing degree days. You can explore over 100 varieties of tulips and experience children’s activities, food trucks and guided family farm tours. Weekend activities include wooden shoe making and steam tractor demonstrations as well as wine tours and a craft marketplace featuring local and handmade goods. Wrap up your visit at the Tulip Market or Field Greenhouse Tent to purchase cut flowers, potted bulbs and merchandise and to preorder bulbs for your own garden. Parking and a shuttle are included with admission, and well-behaved, leashed pets are welcome. Learn more and purchase admission/tour tickets at woodenshoe.com/events/tulip-fest

Portland Rose Festival, Portland, OR

One of Portland’s nicknames is “The Rose City” because, in preparation to host the 1905 Lewis and Clark Exposition, the city planted around 10,000 rose bushes along the streets (although the soil is perfect for roses, they are not native to the area). At the same time, an annual fundraising event by the Portland Rose Society was growing in popularity. In 1907, the city, with help from the Rose Society, introduced its first official Rose Festival that has endured for more than a century. This celebration of the diverse culture and community of Portland runs for three weeks in May and June and features fleet week, which welcomes home members of the U.S. Navy; a carnival with rides and games; not one, but three parades; a treasure hunt; and a milk carton boat race where contestants race boats made of recycled milk cartons and jugs. Be sure to visit the Washington Park International Rose Test Garden where over 610 varieties of roses have been cultivated since World War I when, for fear of varieties being destroyed by war, hybridists began sending roses from around the world to the garden. Find event information at rosefestival.org, and learn more about visiting the rose garden at portland.gov/parks

Schreiner Iris Gardens Bloom Season Event, Salem, OR

Visit Schreiner’s Gardens between May 10-31, 2025, and help them celebrate their 100-year anniversary! You can walk the formal display gardens, iris fields, purchase cut flowers and shop for garden tools and gifts at the shop. If you’re an artist, bring a picnic lunch and spend the day painting or drawing in the garden. Avoid the crowds and photograph the blooms during the morning golden hour with early-bird tickets or visit Memorial Day weekend to shop at the artists’ market. There is free parking and leashed dogs are welcome. Drones are not allowed. Purchase tickets at schreinersgardens.com/ pages/iris-bloom-season

Florence Rhododendron Festival, Florence, OR

This quintessential community festival, held the third weekend in May on the central Oregon coast, kicks off with the crowning of Queen Rhododendra and The King of the Coast. Discover hundreds of wild and cultivated species of rhododendrons (“rhodies” for short) at the Florence Rhododendron Society’s annual show, admire classic cars and motorcycles at the cruise-in and car show and line up for the grand floral parade. This is the second oldest flower festival in Oregon, just one year younger than the Portland Rose Festival, and third oldest on the West Coast behind the Tournament of Roses in Pasadena, California. Visit florencechamber.com/ rhododendron-festival for more information.

Mount Pisgah Arboretum Wildflower & Music Festival, Eugene, OR

This one-day music festival celebrates the beauty of Oregon’s native plants and local music. Browse a wildflower display featuring over 200 local species and listen to live music. Enjoy an immersive experience as you discover art installations made from natural materials along the Art in Nature Trail or take a guided educational nature walk with a local expert. Plants, arts and crafts and food are available for purchase. For more information and tickets, visit mountpisgaharboretum. org/festivals-events/wildflower-music-festival

Cherry Hill Farms Annual Blossom Festival, Caldwell, ID

The farm’s Caldwell location, just outside of Boise, hosts self-guided drives through their spring cherry blossoms during the month of April. It’s a great place to take the kids in their cutest spring outfits for the opportunity to capture the perfect photograph. The drive is about 15-20 minutes long and ends at the farm’s fruit stand where you can purchase food and cherry products and pre-order summer peaches. You’ll also find baby animals, barrel carts, a playground area, fire pits and face-painting for a fun family outing. Visit cherryhillfarms.com/caldwell-id for details.

Flower Festivals, continued page 29

Portland Rose Festival

Grand Floral Parade

Opposite page: Skagit Valley Tulip Festival

JONATHAN PHELPS

You Don’t Know Your Limits if You Don’t Try

Maybe it was growing up on a 600-acre farm along the northern Oregon coast that spawned my sense of adventure, self-reliance and curiosity.

I completed an Ironman triathlon at age 50, climbed several Cascade volcanoes, raced mountain bikes and successfully prospected for gold (albeit just enough for show, not dough). Over the fall, I shifted gears for a different type of challenge: attempting to rebuild the transmission in a Ford Escape SUV. It remained a work in progress when this was written.

I’m kind of a tinkerer, another trait born in my youth when I would disassemble my bike and try, unsuccessfully at first, to put it back together. After a few failed reassemblies, my parents said they would no longer cover repairs; I’d have to walk. Living on a farm with friends miles away, I needed wheels. From then on, I paid careful attention when removing and reinstalling parts after cleaning, lubricating or repairing. Maybe that’s why I’m not afraid to try challenging repairs, like dismantling a transmission. Today’s YouTube DIY videos certainly help.

I’m not one to sit around. I like to do stuff, try stuff and challenge myself.

I remember channel surfing one morning at about age 10 and saw coverage of the Ironman triathlon in Hawaii with its grueling 2.4-mile swim, 112-mile bike ride and 26.2-mile run. I watched to the end and told myself I would finish a triathlon someday. Maybe not the world championship in Hawaii but an Ironman somewhere.

In 2017, not getting any younger, I figured it was time. I signed up for the 2018 Whistler Ironman (also known as Ironman Canada) in British Columbia and trained almost daily for nine months. At age 50, I completed the race, all 140.6 miles of swimming, biking and running. People tell me they would struggle with the swim, but growing up around the ocean and rivers, I was comfortable. Swimming was the most peaceful and enjoyable part

because it was the first leg of the triathlon; I wasn’t exhausted yet. Swimming at sunrise, the scenery was inspiring. Each time I turned my head to breathe, I was entranced by the sun rising over the mountains. Watching the sun come up while swimming, it doesn’t get much better than that.

Nor does it get much better than being atop a mountain at sunrise on a clear winter morning after a fresh snowfall. One morning in the Olympics, I made first tracks hiking to a summit

Jonathan Phelps

and watched the sun come up behind Mount Rainier as it cast its massive shadow over the valleys below. I felt like I was with the angels up there.

I’ve yet to climb Mount Rainier, but I will someday. Oregon’s highest peak, Mount Hood, is on my list, too. I’ve done Mount Adams, Baker and St. Helens (post-eruption) in Washington. Like trying to fix a transmission, you don’t know what your limits are if you don’t try.

I’ve also learned to be more careful mountaineering after a close call descending Mount Baker. My climbing companions and I had un-roped from each other on the lower mountain where the terrain mellows. I was in the rear, a ways back, and nearly fell into a crevasse when my footing gave way leaping across. Fortunately, my momentum carried me forward, but I’ve wondered if my companions would have found me. The lesson: don’t un-rope until the descent’s over—and never take nature for granted.

My other joys are mountain biking and gold prospecting.

As a kid, I found biking was not only a means to visit friends but to make money. I’d collect discarded cans and bottles on rides, put them in a bag and redeem the nickel-per-container deposits at the local convenience store. With my earnings, I’d buy a treat and drink, and sometimes have enough money left to play a game of Galaga.

As mountain bikes became popular, I found them useful for traversing the farm and trails, then graduated to competing, finishing top three in various races for my age category. I haven’t raced in a few years. Now I enjoy mountain bike trips with friends. We’ll ride during the day and camp at night. Our trips have included Bend, Oregon; Cle Elum, Ellensburg and Spokane, Washington; and Penticton and Revelstoke, British Columbia. At Revelstoke, we chartered a helicopter, which dropped us atop Mount Cartier for a beautiful and long descent.

Sometimes I pack my gold-prospecting equipment on rides along rivers. As a kid, I became interested in searching for gold on the farm and got a gold pan one Christmas. The river at the farm didn’t “pan” out, but I’ve found gold in rivers near my home in Kitsap County, Washington, enough to fill the bottom of a vial and be a conversation piece. I’m exploring areas along the Interstate 90 corridor toward Cle Elum and up U.S. Highway 97 into Blewett Pass. I’ll do more there in the spring. If I’m not biking, I combine gold panning with fly fishing.

Someday I hope to take my grandkids gold hunting. My wife, Michelle, and I are expecting our first grandchild in late March. Our son and daughter-in-law, who live nearby in Bremerton, are having a girl. We also have a daughter who’s a grad student at the University of Washington.

Metaphorically speaking, I also like the idea of trying to find gold for bank clients, to uncover their needs and discover solutions. If there are funding hurdles, I want to help clients clear them and reach their personal finish line. That’s something, I can attest, that’s always rewarding.

Jonathan Phelps is vice president-branch relationship manager at Heritage Bank’s Gig Harbor, Washington, banking center. He’s been with Heritage since August 2024. He has about 15 years of management experience in the industry in the Port Orchard, Bainbridge Island, Silverdale and Gig Harbor markets. He’s responsible for overseeing day-to-day operations, managing a dynamic team of other banking professionals and fostering strong relationships with clients and community partners. He’s an expert in merchant services and cash flow analysis, which helps his clients prepare for financial goals and unexpected setbacks.

Flower Festivals, continued from page 27

Camas Prairie Centennial Marsh Wildlife Management Area, Hill City, Idaho

Camas Prairie Centennial Marsh WMA is a high prairie wetland about 90 minutes southeast of Boise. Thousands of people visit in late May to early June to observe the Camas Lily bloom, flooding the prairie with small violet or blue star-shaped clusters of flowers. Historically, the Bannock, Shoshoni and Northern Paiute tribes hunted and gathered camas bulbs, a food source for many indigenous tribes in the Pacific Northwest, on the Camas Prairie. Birders and photographers alike flock here (pun intended) to see the waterfowl and shore birds such as snow geese and northern pintail ducks that feed and nest there. Be aware that there is no designated camping and limited public facilities but maintained gravel roads provide easy access to the area. Visit www.idfg.idaho.gov for more information.

If you’re not up for crowds, you can still seek out speciesspecific displays and botanical gardens or arboretums near you. Municipal parks, university campuses and master gardener extensions are great places to explore local species during the spring blooming season. Or head to the trails in search of native wildflowers. Check your state or national park service website for peak bloom season near you.

Shelly Williams Executive Director Boys & Girls Club of Emerald Valley

Unlike other banks, we chose to specialize in banking for nonprofit organizations. It’s not about us being experts. It’s about listening so that we can truly understand the challenges unique to your mission and provide financial solutions that help you reach your goals and exceed your expectations. Every advantage, every opportunity, everything you need to succeed. Your nonprofit deserves

Social media can be an effective and efficient way for your business to reach current and prospective customers. Here are tips to help fast track your brand’s social media presence and achieve results.

Start with just a few platforms

Set yourself up for success by starting with a manageable load of just one or two social media accounts. It’s a good idea to get into the habit of posting regularly, with comments, updates, images or events, perhaps dedicate about half an hour a day to maintaining your social presence. You could do this in one or two different slots and aim to post during peak traffic times which will depend on your audience.

Profile your customers

Same deal with who you are targeting…try to only focus on a few customer segments. Social media is all about connecting with your target audience, so it’s important to define who your current and prospective customers are. Outline their character profiles by age, gender, interests and profession, then expand on this by determining key concerns that you can help address. Do this for each profile and decide on the marketing messages you want to communicate to that audience.

Determine channel type and target audience

Each social media platform has a primary audience, so find out which one your target market prefers. This ensures your messages are on the most effective platform for engagement and results. If your social posts are linking through to your website, you should be able to monitor which channel is providing the most traffic via your website analytics platform.

Planning an Effective Social Media Strategy

Give useful information, not a sales pitch

Your aim is to help your audience, so give them a tip they can use or share information that helps them solve a problem. When you post relevant information, your audience will view you as an expert, making them more likely to seek out your products and services. Try to avoid hard selling or promotional offers, or you run the risk of possible customers unsubscribing from your media.

Create an editorial calendar

Plan and keep track of the content you intend to post and be aware of what you’ve posted and discussed in the past. A calendar will help remind you what you’re going to talk about.

Communicate

One of the main advantages social media has over other marketing channels is the ability to communicate back and forth with customers. Social listening helps you monitor what people are saying about your business. Respond to comments and mentions on your social media pages and feedback promptly, even if they’re negative. This will encourage more comments and allows you to build relationships with potential customers.

Build your audience

Join social media groups and communities that target specific demographics. Start and participate in conversations by asking questions and commenting on posts made by others. Personalize your business by welcoming new followers and thanking them for sharing your content or by offering a compliment. Engaging with followers can help you build their trust and loyalty.

Track results

Tracking social media performance data is the best way to identify which of your tactics are working and which are not. A few things to watch are growth, engagement and sharing. Most social media networks have tools you can use to measure your results. But if you don’t have time to do this, there are many cost-effective dashboards that offer content scheduling and performance analytic services.

Stay in front

Social media is constantly evolving, with new platforms and features every week. Regularly re-evaluate your goals and experiment with new types of content on different networks. Every few months, step back and consider the big picture. Adjust for anything that is not working and try to recreate the things that are.

Change if it’s not working

Like any marketing strategy, social media should be carefully planned and well executed to avoid undoing all your time and effort. Pitfalls to watch out for include unfinished profiles, irregular posting, too much automated content, over-promotion and inconsistent messages. If something isn’t working, ask yourself why; it may not be right for your audience or there may be smarter ways of doing it. Mistakes are inevitable in any learning process, but research can help you avoid the ones made by others before you.

Keep an eye on the competition

Take some time to see how your competitors are using their social media accounts. It’ll help you know what you’re up against. You can even see how they’re using advertising with Facebook, underneath the “Info and Ads” tab on any Facebook business page. Seeing the type of content and promotions that they share can give you marketing ideas, find your point of difference and communicate it. Don't

It's available on our website! Tailored specifically for our valued business customers, this comprehensive hub is designed to empower you with articles, guides, templates and expert advice needed to thrive in today’s competitive landscape. Whether you’re seeking guidance on strategic planning, marketing strategies, financial management or industry trends, our Business Resource Center has you covered.

FINANCIAL DICTIONARY

Swap rate

The swap rate is a fixed interest rate that a party agrees to pay or receive as part of an interest rate swap agreement. With an interest rate swap, the borrower has two agreements with the financial institution: a floating rate loan and a swap contract that fixes the rate for a specified period of time (the swap rate). The fixed rate (or swap rate in this instance) is determined at closing and stays the same for the duration specified in the swap contract. The floating rate typically changes monthly and is based on an index like Prime or, more commonly, the Secured Overnight Financing Rate (SOFR). To determine the swap rate, the market calculates the present value of the fixed-rate cash flow and the expected present value of the floating-rate cash flow at the inception of the swap, adding some spread related to credit risk and expenses. The swap rate depends on factors such as the term of the swap, prevailing interest rates, the shape of the yield curve and market liquidity. Interest rate swaps play a central role in the derivatives and fixed-income markets. By swapping fixed and floating rate cash flows to meet their needs, parties can effectively limit their exposure to interest rate fluctuations and better manage their risk.

CONTRIBUTOR:

DAVE PURCELL

Subscribe to the digital version of Banking Business at heritagebanknw.com/bankingbusiness. We'll email you a link to read the latest issue when it publishes and highlight a few of our favorite articles.

Dave Purcell has been with Heritage Bank for nearly 10 years when he started the bank’s Capital Markets Group, which oversees the customer-facing swap program. Dave has been in the banking business in the Seattle area for more than 30 years. Continuously conflicted, Dave has a business finance degree from Washington State University and an MBA from the University of Washington. In his spare time, Dave enjoys spending time with family, skiing in the winter, cycling and doing anything on the water in the spring, summer and fall.

Fraud Prevention Tip

Create a Family Code Word

In our last issue, we talked about the advancement of artificial intelligence (AI) and how it can be used to facilitate fraud. One particularly insidious form of fraud involves scammers impersonating family members or trusted authorities over the phone to deceive victims into providing money or sensitive information. This is considered what’s called a “deepfake,” which are videos, voice recordings and images doctored using AI to resemble and/or sound like a friend, family member, government official, etc. That’s why creating a family code word is a simple yet effective measure to protect your loved ones from falling prey to such schemes.

What is a family code word?

A family code word is a prearranged, secret word or phrase known only to your immediate family members. It serves as a private verification tool to confirm the identity of a caller or texter claiming to be a family member. This code word can be used in emergencies, when communicating through unfamiliar phone numbers or during situations where trust needs to be quickly established.

How scammers exploit trust

Scammers often rely on emotional manipulation to pressure their victims. Common tactics include pretending

to be a relative in distress, such as a grandchild needing bail money or a sibling involved in an accident. They might even use personal details gathered from social media to make their stories more convincing. In these high-stress moments, people are more likely to act without verifying the authenticity of the situation.

This is where a family code word can be invaluable. By asking the supposed family member to provide the agreedupon word, you can immediately distinguish between a genuine emergency and a fraudulent attempt.

Here are some tips for creating a code word:

• Choose a unique word or phrase. Select a word that’s easy for your family to remember but difficult for others to guess. Avoid using common or predictable words like pet names or birthdays.

• Communicate it securely. Share the code word with all immediate family members in a secure setting, such as an in-person family meeting. Emphasize the importance of keeping it private.

• Establish guidelines. Agree on specific situations when the code word should be used. For example, if a family member calls from an unknown number or requests money unexpectedly, the code word can serve as a verification step.

• Practice its use. Conduct mock scenarios to ensure everyone understands how and when to use the code word effectively. This can help younger family members or seniors become comfortable with the concept.

• Update as needed. Periodically review and change the code word, especially if you suspect it has been compromised.

A family code word adds an extra layer of security that scammers cannot easily bypass. While they might impersonate a loved one convincingly, they’re unlikely to know your family’s private code word. This simple safeguard empowers you to pause and verify before responding to urgentsounding requests, reducing the likelihood of falling victim to fraud.

Additional tips for fraud prevention

• Stay calm under pressure. Scammers thrive on creating a sense of urgency. Take a moment to verify the information before acting.

• Limit personal information online. Be cautious about sharing details on social media that scammers could exploit.

• Report suspicious calls. If you suspect a fraud attempt, report it to your local authorities or the Federal Trade Commission (FTC).

• Educate vulnerable family members. Ensure that children, seniors and those less tech-savvy understand the risks and how the code word works.

A simple step for peace of mind

In an era where fraudulent schemes are increasingly clever, a family code word provides a straightforward and effective way to safeguard against deception. By taking this proactive measure, you not only enhance your family’s security but also foster a sense of preparedness and unity. Remember, a little precaution today can save you from significant trouble tomorrow.

This information was provided by the Washington Bankers Association as part of the Banker’s Care initiative. Bankers Care began as an annual food drive, working in partnership with Northwest Harvest and has since expanded to include financial literacy and education programs and other philanthropic and community service contributions made by banks. Heritage Bank is a Bankers Care participant.

We get it. After a while your options start to run together. Banking can be similar. One choice looks like the rest. But nothing could be further from the truth. We chose to specialize in banking for firms like yours. For us, it's not about being legal experts. It's about listening and getting to know you, your firm and your needs inside out, and then making financial solutions tailor-made to help you reach your goals. Every advantage, every opportunity, everything you need to succeed.

Visit bankwithheritagenw.com/legal to learn more and connect with a banker near you.