Risks of Fraud To Your Business

Fraud against business has been steadily climbing year after year. We have seen it from the large corporate hacks to many unseen instances to smaller businesses. Below we detail what types of fraud are happening out there and what options you have to prevent it.

Types of Fraud

  1. In 2019 61% of all fraud cases were “business email compromise” (BEC), 58% were outside individuals ( forged checks, stolen card) and 26% third party (vendor, professional services provider)
  2. 81% of business organizations were targets of payment fraud attacks in 2019
  3. 2019 methods of fraud by percentage:
    1. Checks: 74%
    2. Wires: 40%
    3. Corporate/Commercial cards: 34%
    4. ACH debits: 33%
    5. ACH credits: 22%
  4. 42% of B2B transactions are made by check
  5. 60% of organizations have a fraud policy in place

How to Protect the business

Most banks offer some level of fraud protection services (typically Positive Pay and ACH fraud filters) for their clients.  Positive Pay is a system that allows for a daily or weekly upload, of checks that you have written, to your bank. Checks that are not included in that upload are flagged and you are usually given the option to approve or deny that check. ACH filters are a pre-approved list of companies that can debit your account. Another option typically offered by banks, at no cost is dual control. This allows one individual to initiate a wire or ACH and another individual in the company to review and approve the transaction.

When I had discussions about fraud and how to protect the business, one of the common objections I heard was the cost of the services.  The best way to approach those services is to view them as an insurance plan.  It is money out of pocket and you hope you never need to use it. 

Who is responsible when fraud occurs?

A misconception out there in the business world is that FDIC or the bank will cover any losses due to fraud.  That is not true.  In many conversations clients would refer to fraud on a credit or debit card, as an example.  When credit or debit card fraud occurs, typically those losses are covered by Visa, Mastercard or Amex and not the bank.  The bank is not covering those losses.  When a business incurs losses, due to fraud on a bank account, those are going to be a loss to the business.  The bank will not automatically replace the lost funds but will do its best to work with any corresponding banks to recover whatever funds they can.

One of my good clients who refused the fraud services and was a victim of #1 listed above, a case of business email compromise.  The “owner” of the company sent an email to the finance manager asking to send out two wires, for approximately $130,000.  Both wires were sent, as this is their typically procedure.  In a passing conversation later that day about the wires, it was discovered the owners email was hacked and the business was a victim of fraud.  The bank was able to recover about $30,000 but the business took a loss on the other $100,000.  Not many businesses can sustain that kind of loss.  This client, fortunately, was able too. 

When looking at your options, look at any services the banks is offering as an insurance policy.  This instance of fraud could have been avoided by simply by the business using dual control. One will never know the costs of fraud until the money is already gone and your business at risk. 

If you want to review what bank services you have or what your bank is offering, reach out, let’s talk.  We are happy to have a conversation and provide guidance.


Lending Merchant Cash Advances

Merchant Cash Advances

Merchant Cash Advances (MCA) have been an available form of financing for years now.  They are not your typical bank financing but can provide valuable cash flow to a business quickly and on a short-term basis.  In this environment of COVID, banks have become more conservative and retail store locations are under more scrutiny, this form of financing can prove to be a difference maker.  In many instances, to apply for an MCA, a 1-page application is required, verification of 2-3 months of bank statements and a most recent merchant statement are all that is needed to start the process.

MCA’s are not a loan but an advance lump sum payment in exchange for future credit/debit sales.  The lender will request bank statements to evaluate the business cash flow, determine the funding amount and a repayment plan.  Typically funding on this type of financing can be completed in 48-72 hours.  Repayment plans are a daily debit to the business account for a specific dollar amount, for a set number of days/months.  The language associated with MCA’s is not what you would see in traditional bank lending either.  Instead of interest rates you will likely see buy and sell rates or factor rates.  An example would be as follows: you may receive a factor rate of 1.4, which would translate to every $1 received by the business would pay back an additional $0.40 for the use of the funds. 

What has driven the popularity of MCA’s is larger banks have started to shift away from these smaller loans.  An unfortunate consequence of the 2010 Dodd-Frank Act was that small business lending became less profitable for banks.   Traditional bank lending is going to evaluate business cash flow, credit scores and collateral.  That process could take a month or more and requires a significant level of effort to get there.  When options for small businesses are limited, like they are today, all options should be on the table. 

The key for any business is the level of trust you have for those you are working with.  Still Water Solutions has the experience and the network that we trust to help you.  We are always available for a conversation to discuss what your needs are and the appropriate path.  Having worked with business owners for years now we know your time is valuable, and we want to help you make determinations as quickly as possible. 

Please do not hesitate to reach out for a conversation.  We want to be an asset to you and your business. 

If you would like to apply for a financing request please visit here.


Dining, Return to Normal – The Morning Consult

The Morning Consult is providing weekly tracking on key issues/sectors related to COVID-19. As vaccines start to roll out, businesses start bringing people back to the office we will slowly see a return to normal. Below is a link of their weekly report related to dining. There are some positives here, 35% of all respondents said they would be comfortable going back to dining in the next month. As reopenings slowly begin, warm weather rolls back around and the restaurants start to tap into the second round of PPP, there is hope on the horizon.

If you are a business that may need financing and need to buy time over these next few months, let’s have a conversation. Still Water Solutions is here to have a conversation, determine what your path forward is and will walk with you through the process. With 15 years in banking, there is a wealth of knowledge to provide and avenues to explore.

Tracking the Return to Normal: Dining – Morning Consult


A Return to Normalcy…..

As we start the process of rolling out vaccines and look for ways to get back to normal, this is an interesting new set of data tracking by the Morning Consult for work place sentiment. What are your employees saying?

Tracking the Return to Normal: Work & Offices – Morning Consult


Business Loan Applications – The Basics

Anyone that has ever applied for a business loan or line knows it can be a long and cumbersome process.  The key to shortening the process and smoothing it out, really goes to how you start the process.  A complete and concise financial package will go a long way.  Much of the back and forth between borrower and lender, that slows the process down, is related to needing additional information, specific documents not being completed and the bank not wavering on anything, because they need to meet all their regulatory standards.  When pulling a financial package together there are some standard items that are nearly always asked for.  Here are a few of those items:

  1. Personal tax returns
  2. Business tax returns
  3. Personal financial statement
  4. Aging AR/AP’S
  5. YTD Balance Sheet and Income statements
  6. Business Debt Schedule

Depending on your request, whether it be a loan, line, real estate or business acquisition there will be some documents specific to that request.   Disclosing potential issues also assists in keeping the process moving ahead.  Bankruptcy, other ownership interests, certain financial transactions can cause additional questions and also bring into doubt the potential borrower’s character as well, if not disclosed early on.  

The most effective way to start the application process is to ensure you have a complete package, have all the documents completed fully and disclose anything that might be questioned during underwriting and respond quickly to bank inquires. 

If you are starting this process or new to it, reach out for a conversation. With 15 years in banking, I am familiar with the banks, how they operate and can assist in the process. 


PPP – Round 2 Resources

In an effort to simplify the process and help business owners gather information about the new round of PPP in 2021 we will be providing links to training resources and other information as it becomes available.

Update 2/11: Round 2 of PPP is off to a slow start but here are the top national lenders by net dollars lent thru 1/31/21, according to the SBA website. Below is an article detailing some additional information on Round 2 of the PPP.

Additional notes for this Second Round of PPP, per information gathered from

  1. The maximum loan amount for Second Draw PPP is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million. For Accommodation and Food Services, the max Second Draw PPP is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million
  2. To qualify you also need to demonstrate a reduction of gross receipts of at least 25% between comparable quarters in 2019 and 2020.
  3. The First Round usage will have used or will use the full amount for authorized usages.
  4. Must have less than 300 employees.

Looking for Lenders is a tool provided by the SBA:

Update 1/26: SBA is having issues around accepting applications from banks. Patience while going through the process.

Banks press Treasury, SBA to fix ‘systemic’ small business loan glitches – POLITICO