Millennials are a hot topic among media, and for good reason - the Millennial generation are taking a different approach than those who came before them in many facets of life.

As a result, businesses are making significant changes in the way that they operate in order to meet the new and changing needs of the Millennial audience.

The Millennial consumer is now an active member of our workforce and economy, and the generation’s inclination towards innovative and on-demand solutions is shaping both the consumer and business world. One area you might not have expected to see a big change is finance, as banks have been a steadfast institution in our society for decades. However, research shows that when Millennial entrepreneurs are seeking finance, the banks are the last place they go looking.

Alternative lenders are meeting the need

Equifax data shows that Millennials drive 62% of alternative finance enquiries, indicating that alternative lenders are meeting the needs of the generation in a way that the banks simply can’t. The recent MYOB Business Monitor found that 36% of Millennial small business owners are planning to access finance over the next 12 months, this figure is 15% higher than the national average, indicating that the generation is leading demand for small business funding. Unfortunately, out of the 44% that made an application, a whooping 39% of applicants were unsuccessful.

As young business owners struggle to secure finance through traditional channels, many are opting to look at alternative sources of funding for a solution. Despite not being able to provide the same interest rates as the banks, there are many other characteristics that make alternative lenders appealing to young borrowers.

Alternative lenders take a different approach

Second-tier providers have a focus on customer service, meaning that simple online applications, fast approval times and easy to understand contracts are at the core of their offering - which is in line with Millennials fast-paced and on-demand lifestyles. Another important consideration for young borrowers is the banks rigid lending requirements, which often call for some form of property as security.

Many Millennials have widely accepted that the idea of home ownership is a stretch, and as property prices continue to fall, interest in alternative finance rises. There is little ability for small business owners to access loans through the banks that aren’t secured with property, and for those who aren’t home owners or don’t want to put their property at risk, this makes bank funding unrealistic. Rather, young business owners are looking to alternative lenders which don’t ask borrowers to put forward property in the funding process.

A recent SME Growth Index found that an outstanding 91% surveyed would be willing to pay higher interest rates to avoid using their home as security, and 61% of those said they would ‘definitely’ make the trade off. This reflects the significance of the country’s property prices to the operation of the finance sector, and alternative lender’s solutions mean two industries don’t have to be so heavily linked.

Millennial entrepreneurs are knocking on the doors of alternative finance providers, and these lenders are welcoming them in. For the highly geared Millennial who may not have property to their name, the struggle to make it work with traditional lenders is very real. Rather, alternative providers offer the flexibility that this young generation is seeking in all areas of their lifestyle and are looking to build long-term relationships with borrowers. As a result, alternative lenders have established themselves as Millennial friendly funders.

Franchise Finance HERE from James and his awesome team!