As a Millennial, falling right in the middle of the 18 – 34 age group at 28, I’ve heard a lot of things said about my generation. I’ve heard the positive statements: that we’re creative, innovative, socially conscious, and passionate. I’ve heard the negative as well: that we’re lazy, entitled, rebellious, and stubborn. Honestly, I agree with a lot of the statements. But today I’m not going to talk about the personality of a generation. I want to talk about how Millennials are finding business loans.
According to a recent Bank of America study, 14 percent of Millennial business owners have used some form of alternative financing. This is compared to the other generations, who are all below three percent. Why the discrepancy? I’ve got three theories:
Theory Number One
Millennial business owners haven’t been in business nearly as long, so they’re forced to turn to alternative financing. Usually banks won’t give a loan to a company that’s been in business under a year. In the past decade, the alternative financing industry has really taken off, filling the gaps left by those banks. When the young business owner tries to get money for their young company, they get rejected by the bank, and their next step is to look for alternative financing.
Theory Number Two
Millennials are more likely to use online sources because they trust the internet more than the older generations. Having grown up with Amazon and Google, they’re okay trusting online companies with sensitive information, like credit card numbers, addresses, phone numbers, etc. When they see an advertisement for an online lender, Millennials are more willing to give out the information needed to apply for a loan.
Theory Number Three
There’s that innovation thing we talked about. Millennials have seen other businesses going through the banks loan system, and they’re thinking, there has to be an easier way! They then go online to services that can get them offers in less than an hour, and they go with that.
Maybe it’s the arrogance of youth, but it seems the Millennial generation realizes just because that’s the way it’s been done for years, doesn’t mean it’s the best way. For a large portion of businesses, alternative financing is the better option.
I’m a big fan of the Millennial generation, and watching them disrupt industries that have been stale for a long time is refreshing to watch. What do you all think? Why do you think Millennials are using alternative financing more than the older generation?
If you’re interested in finding a loan for your business, get started here with Lendio’s free loan matching service.
If you found this article interesting, you might be interested in: