The exchanges were quick and, a few times, heated. But for the most part, the tweets were insightful between small business owners, lenders and others during a recent Twitter town hall hosted by Intuit Inc.
More than a dozen tweeters participated in the June 30 online session that focused on how small businesses can access credit and build relationships with their financial institutions. Among the experts on the panel was Phil Bryan, senior vice president of retail and lending at $767 million Metro Credit Union in Chelsea, Mass. Bryan has managed small business lending programs at credit unions and banks since 1999. Metro, which has been on Twitter for a few months, is also the top SBA credit union lender in Massachusetts.
"This was my first Twitter experience, and I was pleasantly surprised," Bryan said. "The pace was fast and furious. But I think it can be a valuable way for credit unions to build awareness."
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Twitter is a growing forum for credit unions to spread their footprint. According to several industry estimates, the social network channel has nearly six million unique monthly visitors and 55 million visits each month. The beauty of the sharing, advocates say, is that users are limited to tweets under 140 characters. That text limitation forced participants in the Intuit session to keep their responses succinct and dynamic.
To kick off the town hall, the Intuit moderator asked the burning question: What advice would you give to a small business owner looking for a line of credit or loan now? Bryan suggested making sure the applicant had updated financial records and work with a financial institution approved by the SBA.
Speaking of the SBA, an offshoot conversation started on the agency's new America's Recovery Capital program, which offers interest-free, fee-free loans and deferred payments of up to $35,000 to help small businesses pay principal and interest payments on existing qualifying debt. When the program launched on June 15, the SBA predicted the loans would be so popular that it limited the amount of loans lenders can approve. The agency said it expects to book 10,000 loans.
Gordon Gerwig of First U.S. Community Credit Union in Sacramento, Calif., told Twitter followers that the financial institution is getting many SBA ARC loan applications.
Another participant was not as optimistic: "ARC is a bust. SBA has only approved loans for $4.6 million the first two weeks. Go another way." The SBA confirmed that 72 lenders had approved 139 loans totaling $4.6 million since the ARC program's debut.
When asked about advice to entrepreneurs in helping them decide the type of loan that is right for them, Bryan said that depending on whether 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."
Someone asked if credit unions are financing startups without real estate collateral. Bryan said it would typically depend on the credit union. However, "Pure startups (not purchases) are generally discouraged unless well-secured."
As for what small businesses with an existing loan at their bank should do if they are unable to get more capital from that lender, Bryan suggested shopping around because that lender may have changed its policies. Credit unions are a great option, especially if small business owners are able to differentiate their product offerings, he added.
That "magic formula" for deciding if a loan gets approved? "The three legs of the stool, credit, collateral, cash flow" are still applicable, Bryan said. 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." To build relationships with lenders, a Twitter panelist suggested volunteering and sponsoring events for local banks. Someone from Ent Credit Union chimed in with "and credit unions, too."
One of the panelists was unfamiliar with credit unions outsourcing SBA processing. "Trouble brewing?" he wondered. "Smaller credit unions may outsource using a CUSO. Larger credit unions like Metro process SBA [loans] in-house. I don't see a problem," Bryan said. Another Twitter participant mentioned Member Business Lending LLC in South Jordan, Utah, which is one of the top SBA credit union lenders in the country. The CUSO, he said, "adds efficiency."
The hour-long session seemed to zip by as participants peppered the forum with questions on everything from using goodwill as collateral to the pros and cons of invoice factoring. Bryan said that even though the exchange "went off in a bunch of different directions" at times, he is convinced that Twitter could provide another outlet to reach Metro's more than 100,000 members. After reading a blurb in Kiplinger advising readers to at least reserve their name on Twitter, Metro signed on to the social network a few months ago.
"Even though it's more of a national forum, it may help us in the Northeast part of the country [where Metro is based]," Bryan said about Twitter. "I think it can be a valuable way to follow members."
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