By Tom Ballard, Director of Innovation and Entrepreneurial Initiatives, Pershing Yoakley & Associates, P.C.
Jonathan Patrick knows the needs of entrepreneurs.
“I’ve been around entrepreneurs all of my life,” says the Senior Vice President and Chief Lending Officer of the UT Federal Credit Union (UTFCU). In fact, Patrick started his own company – GoGrabLunch.com – several years ago.
Acknowledging that he was fortunate to have money to start the company, Patrick notes that “capital is always an issue” for most new ventures.
Fortunately, the 15-year banker and his employer are doing something to make a difference, particularly for entrepreneurs in the earliest of early stages. UTFCU has launched a microloan program under the name “Line 12 Micro Fund.” The reference is to the business income portion of the Internal Revenue Service’s Form 1040.
The fund and its online application went live on March 1.
“There is no one who will provide an entrepreneur with a good idea the $5,000, $10,000 or $15,000 they need to get started,” Patrick explained. “A credit union’s job is to help build the community.”
Taking this mission to heart, Patrick says he asked, “Why can’t UTFCU do something to help?” The answer from UTFCU’s Chief Executive Officer and Board of Directors is the “Line 12 Micro Fund” that is primarily focused on start-ups, but will consider existing businesses.
UTFCU has allocated $100,000 to provide low-interest loans to five to 10 companies in the first year. Loans can go up to $20,000, although Patrick says companies could apply for additional loan amounts under UTFCU’s normal application process.
“We are blending the debt and equity finance worlds,” he explains, citing an arrangement with Angel Capital Group to use its proprietary “Venture360” application process.
Funding is not the only focus of UTFCU’s new initiative.
“Capital is critical to start-ups, but access to other resources is, too,” Patrick says.
UTFCU has established an advisory committee to not only screen applicants but also provide some critical mentoring to those selected for loans.
Members are Eric Dobson, Chief Executive Officer of Angel Capital Group; Mara Harvey, President of Harvey & Associates; Roby Robinson, President of Robinson IP Law PLLC; Jennie Hitchcock, President of Compass International Resources Inc.; and Bruce Hayes, Senior Business Specialist with the Tennessee Small Business Development Center.
Patrick says the first loans could be announced as early as a March 20 combination launch party and pitch competition. It will be held from 5 to 7 p.m. at McClung Museum on the University of Tennessee’s Knoxville (UTK) campus. Online registration is available here.
UTFCU has been supportive of a number of entrepreneurial activities such as the twice-a-year “Vol Court” event hosted by UTK’s Anderson Center for Entrepreneurship and Innovation.
“We want to help provide a continuum of capital for start-ups,” Patrick says of the latest UTFCU initiative.
As far as GoGrabLunch.com, he says, “I’ve parked it for a while.” The B2B (or business-to-business) site was a scheduling tool that connected business professionals in complementary areas.