By Jonathan Patrick, Senior Vice President/Chief Lending Officer of the UT Federal Credit Union
There is a video flying around the internet where Mark Cuban is quoted as saying that “If you are starting a business and you take out a loan, you are a moron.” Apparently, I am one of those morons. Cuban’s comments revolve around his belief that there is so much uncertainty in a startup, and that the banks don’t care about your business, so getting a loan to get started creates conflict.
Well, Mark, you are right. Most banks don’t care about your business. In fact, most won’t even bother talking to a startup. Which is exactly why UT Federal Credit Union launched the Line12 business micro-loan program. You see, as a credit union, it is in our DNA to impact our community and our members. So, if the only way a member can bring their startup to life and fulfill their dream of owning a business involves a loan, then you can count us in.
Rest assured it’s not about the revenue to our credit union. In fact, we probably have more expense associated with that loan than we do income. And yes, we know that we are “saddling” a startup with debt. That’s why we provide more than just capital in the form of additional resources to help them increase their chance for success. It’s easy to say as a lender, but there is such a thing as “better” debt to have. I’d much rather a member borrow five, ten, or twenty thousand dollars to start a business than on eating out and shopping.
So, is a loan for a startup right for everyone? Absolutely not. In fact, UT Federal Credit Union goes to great lengths to vet out our applicants and only take those who we feel can afford the debt without relying too much on expected business income. We also rely on our committee of outside experts to tell us which startups they feel have the best chances of succeeding. Unfortunately, we have to tell far more applicants “no” than we do “yes.”
Cuban does point out that there are plenty of ways to start businesses inexpensively through hard effort rather than capital. I couldn’t agree more. In fact, I’ve started businesses for a few hundred dollars that have brought me thousands of dollars in return. But there are times when the right idea takes capital to scale. That’s when UT Federal Credit Union is there.
View Jonathan Patrick’s LinkedIn profile at https://www.linkedin.com/in/jonathanmillspatrick.