From collateral alternatives to questioning if there is a "magic formula" to determine loan approval, Phil Bryan, senior vice president of retail and lending at Metro Credit Union, shared his insights during a Twitter town hall this afternoon.
Hosted by Intuit, the Twitter session focused on small businesses and their access to credit. Bryan was a part of a panel of experts. When asked about advice to entrepreneurs in helping them decide the right type of loan, Bryan said depending on if it is a term loan or line of a credit, "ask the question 'can I repay this in less than a year.'"
"You need cash flow in either situation, but a term loan is generally easier because it is principle and interest and secured," Bryan said.
Someone asked if credit unions are financing startups without real estate collateral. Bryan said it would typically depend on the credit union, however, "Pure start-ups (not purchase) are generally discouraged unless well-secured."
That magic formula for deciding if a loan gets approved? Bryan said, "The three legs of the stool-credit, collateral, cash flow."
But "relationships still play a big role. If you always pay your [credit union first], they are more likely to stand by you in tough times."