Jonathan Patrick does not believe entrepreneurship is aboutmarketing, logistics, talent or even capital, although each areessential to getting a new business off the ground.

What is really needed is the idea–the moment when anentrepreneur looked up from his or her daily tasks and saw anopportunity to fill a void, said Patrick, chief lending officer atthe $225 million UT Federal Credit Union in Knoxville, Tenn.

Helping members realize their small business dreams earned Patrick CU Times' 2015Trailblazer Lending Officer of the Year.

“There are thousands of budding entrepreneurs all around us,” hesaid. “Haven't each of us in our daily lives seen something that weknow we could do better or more efficiently or less expensively ifwe had the chance or time or capital or energy?”

The reality is most people with good ideas for products orservices do not start businesses because they lack time, capital,marketing, talent and logistics.

Patrick said he believes his credit union can and should helpcommitted entrepreneurs overcome those obstacles.

“This is one of the things we should be doing as a creditunion,” he said. “This is one of the most important ways we canimpact our members' lives as well as the community.”

To that end, UTFCU set aside $100,000 in 2014 to launch theLine12Fund, which funds startup businesses and guidesentrepreneurs through the pitfalls that can destroy newlaunches.

The fund's name came from Line 12 on the IRS 1040 tax form whereindividuals record the amount of income gained through theirpersonal business efforts, Patrick explained.

“Our goal is to provide something that is a little bit like thetelevision show “SharkTank,” only longer term,” he explained.

“People who want to be entrepreneurs, present and press theirideas to a panel of professionals who have expertise in launchingsmall businesses and who can help them better prepare as they maketheir way toward getting a loan to get started,” he added.

Prior to getting into business lending, Jonathan Patrickcompeted in mixed martial arts in the U.S. and Japan. While he hasgiven up active competition, he said the lessons taught him aboutpersistence and mental toughness.

Patrick, who comes from a family of entrepreneurs in therestaurant business, said UTFCU modeled the Line12Fund on hisprevious work with the Angel Capital Group, a network of investorswho use their money to help fund startups.

A software platform developed by the two entities helpsunderwrite the entrepreneur's loan application and guide themthrough the process.

The goal is not only to help fund the startup and equip theentrepreneur to succeed, but also to offer aid to those whohave been shunned by banks, Patrick said.

On the face of it, a startup microfund is a crazy concept, heacknowledged. The risk appears outsized and the monetary reward maybe very small.

Loans for $50,000 or less to start small businesses,particularly if the applicant does not have a deposit ortransaction account, will not interest most banks, he said.

The Line12Fund has an edge by working with entrepreneurs todevelop a relationship so they know they have a resource when theyface an unexpected challenge or have questions, Patrick said.

The fund does not ignore traditional underwriting metrics suchas credit scores and debt load, but looks beyond those to the wholeperson and the business idea.

For example, many ideas never make it through the Think Tank, ortesting, phase, Patrick explained.

That is not because the plans were bad ones, but instead theentrepreneurs had not thought them through with sufficientdepth.

The key difference is that the Think Tank ideas can be tested,seasoned and improved until they finally receive funding.

“The Line12Fund sees helping entrepreneurs in more of arelational than transactional way,” he said.

Although the fund has only been operating since March 2014,Patrick said it funded more than the initial amount budgeted.

One applicant went on to land multiple, six-figure contractsafter using capital from the fund to hire new staff.

Further, The Southeast Angel investment group invited thecompany to make a pitch after the entrepreneur presented the firmto the Line12 committee.

A borrower from the fund went on to pitch a business to theShark Tank television show last September.

Patrick said he couldn't share any additional details about theresults because the episode has not yet aired.

So far, Line12 has funded companies that produce videos, improvesoftware platforms, sell e-cigarettes and offer on-demand posterprinting.

Patrick shared an email from Jonathan Sexton, the CEO ofBandposters, one of the small firms that received financialassistance.

“The Line12Fund made it possible to gain access to the capitalwe needed to grow, quickly and efficiently, without having to giveup a huge equity stake in our company, which will save us anincalculable amount of money in the future when we sell our companyfor millions of dollars. UTFCU is the best,” Sexton wrote.

Patrick is careful to put Line12's success in the context ofUTFCU and the willingness of the credit union to consider andexperiment with a new idea of how to underwrite and provide smallbusiness loans.

Still, this was only the latest in the credit union's smallbusiness lending efforts.

In 2012, the credit union partnered with the University ofTennessee Knoxville's Anderson Center for Entrepreneurship andInnovation to offer a series of one-hour seminars on how to start asmall business.

The Small Business Administration also recognized UTFCU as aleader in Tennessee for two consecutive years.

The cooperative's SBA lending increased from five loans in 2012 to seven in 2013,and jumped to 23 in 2014, according to data from the NCUA.Furthermore, the credit union's overall small business loansincreased from around $18 million in 2012 to $24.5 million in2014.

Patrick said he hopes over time the Line12Fund idea and softwareto implement it will spread among credit unions. Others can thenuse the model in their communities to help members launch smallbusinesses.

“Funding our members' startups and helping them succeed is goingto be the sort of lending that will make the most difference in thenext decade,” Patrick said.

“Credit unions should be doing more of it, and I hope theLine12Fund can help make that happen.”