How Are Millennials Changing the Face of Startup Lending

Finance News

by Millennial Staff,

It is only fitting that in such neurotic times the term ‘millennial’ has acquired a nebulous meaning. Sure enough, it is meant to be a moniker for a generation that is right now in their 20s and 30s, but you’ll hear as many strong opinions about the exact parameters of the term as there are people. Hence the neurosis which has caused a digital tempest that is raging for the last 20 years or so.

And yet, the eye of this storm is where the answers lie, as most of the millennials with entrepreneurial potential and ambition were born on the high waves of the internet. Technology is the life-blood that makes us tick and saw us transition to the workforce age, and it is a tool of independence that encourages millennial entrepreneurs to establish small businesses and seek out the appropriate loans. Consequently, they are changing the face of startup lending en masse and thus dictating the pulse of the economic market.

Lending zeitgeist, in a flux

Just a few years ago, circa 82% of small business applicants were denied their plea for a loan. According to the latest findings, this percentage has deflated to around 73%, while some smaller establishments have an approval rate that goes up to 50%. This positive development has occurred because of a recession that has slowly flipped to the economic upswing over the last two to three years.

Beyond that, banks are not the only venue you can turn to for answers. If your idea is inventive and fresh, you can grab the attention of investors, but that can take you down a whole different path with its own set of trappings. To be blunt and brief, when you deal with humans in the realm of business, matters can get much more unpredictable than if you tackle the landscape of lending and bank loans.

The emergence of online lenders

The entire framework of credit has been loosened up thanks to the emergence of online lenders. You can get creative with financing your startup if you decide to turn to these small business loan platforms. That’s because they can help you take the first step to developing the business of your dreams. The upside of such loan marketplaces is flexibility. Nobody will discriminate you based on your age, experience, or if your idea behind a company doesn’t fit the proverbial mold. After all, this is a better option if you are showered with offers of investors and you doubt their intentions too much to write away your equity.

What are the upsides of online lenders?

They get more approvals

As it has been mentioned above, smaller banking institutions have a stronger approval rate. Online lenders will shame even the most productive of banks with their performance, and this is usually the first fact young entrepreneurs are interested in. Simply speaking, they just want to get their hands on the ‘tools’ to conduct their business as fast as possible. If you are interested in the exact numbers, online lenders approve circa 60% of applications, or more.

The process is faster

There is something undeniably kafkaesque about the administrative process related to government establishments, federal institutions, and pillars of economic banking. The amount of paperwork you have to fill out and the information you need to disclose is soul-crushing and so labyrinthine that you can forget the motivation behind the entire progress somewhere behind the third set of forms. Online lenders typically require less information in ordered to push the entire process forward. Should you choose the right lending ‘marketplace’ the process can be burned through in a matter of minutes, and the idea of this is incredibly enticing for eager go-getters.

The money goes through as quickly as possible, but consider rates

While we are on the topic of go-getter mentality, the millennial entrepreneurs with fresh ideas will be thrilled to discover that the money comes through in a matter of days. This is a stark contrast to regular banking protocols that take weeks to process and months to enclose the agreed sum. The only thing that you should truly be afraid off in the entire process is the matter of high rates. You should have an understanding for the online lenders themselves – they are the ones who are taking the brunt of the risk, so large interest rates only make sense. However, due to the development of technology, even this factor is changing in favor of millennial entrepreneurs as well.

Conclusion

It is interesting to see the inversion of power dynamics in the relationship between business and economics. It used to be a cliché to represent the small business as an underdog that is slowly crushed by the thumb of big banking and loan sharks, and for the most part, this representation wasn’t off the mark. However, the millennial generation isn’t exactly content with following the rhythm forcefully established by the institutional pillars of the economy.

The influx of digital into the realm of business surely helped the matter, but we can easily say that millennials are the ones who are changing the face of the industry, and business lending is undoubtedly an example of this. It may be slightly too idyllic to adopt this perspective, but it is the truth that cannot be denied and whether this will end up making things better or not is a matter that cannot be fully predicted even by the best economists out there.

Millennial Magazine

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