Why Gen Y are moving to non-bank lenders



Heath Fitzpatrick, COO at ebroker

Expert | Featured

By Heath Fitzpatrick

Gen Y is all about “on demand”. From TV to food and clothes, this is a generation all about convenience. Having been brought up immersed in technology, Gen Y like to order what they want, when they want, and from the comfort of their own homes.

This is equally true with managing their finances.

Generally speaking, Gen Y small business owners are not going to be keen to arrange a time to sit down with their bank manager. This is precisely why Gen Y and fintechs are such a match made in convenience heaven.

Repeatedly, research is showing that Gen Y small business owners are applying for loans to enable their business to reach their potential but being rejected. Research is showing that plenty of business owners (around four in 10) are applying for loans but more than a third of applications were rejected. Around 39% have failed to get the required finance.

The number of loan requests being declined by banks is suspected to be even higher – more than half.

That’s a lot of business potential not being fulfilled. Why is this happening?

Well, it’s widely speculated that Australia’s youngest small business owners are struggling to get finance because they don’t own their own home. The soaring property market across the country over recent years swiftly explains why homeownership figures have floundered.

Perhaps homeownership was taken for granted for such a long time that no one questioned what would happen if this piece of the finance jigsaw was removed. Now, we are really seeing the generational impact of this systematic failure in full force.

So, historically people owned their own homes and trusted banks, therefore there was no visible issue. Whereas now, Gen Y don’t tend to own their own home and trust in major banks has floundered thanks to the Royal Commission, which exposed incredible systematic failure.

Gen Ys with small business dreams are facing a multitude of challenges. And we’re seeing all of this at the same time as trust in the major banking system has disintegrated.

This has created the perfect opportunity for a new wave of financial challengers to come into their own.

This new wave – enabled by AI and the very latest in technological advancements – is finding new solutions to the generational lending issue. These new lenders don’t need home ownership as a prerequisite to arranging finance, and they’re not bogged down by regulations or lack of competition. Frequently, they are proving more able to help small businesses than banks.

Gen Y have grown up with changing technology all around them, coupled with a high awareness of how to use it to achieve their goals. They are inquisitive, innovative entrepreneurs who aren’t scared of change and actively seeking solutions.

All of this explains why Gen Y are moving towards the disrupters in the financial market, like ebroker. These new platforms and lenders are providing valuable fixes to the small business lending market, growing in direct response to the massive need in the market.

Whether the banking system likes it or not, Gen Y small business owners deserve our support. In fact, Gen Y small business owners have been found to be most likely to report profits over the last year, compared to the national average. Gen Y’s reporting generating profits sits at 42% compared to 26% across the nation. Plus, Gen Y small businesses are also most likely to look to expand in the next 12 months.

Currently, there is huge pressure on the returned Morrison government to follow through on promises made to the small business sector. This is all good news for small business owners who can look forward to the establishment of the Australian Business Growth Fund which will facilitate up to $1 billion in capital investment, improvements to accessing funds on competitive terms and the extension of the instant asset write-off.

Gen Y may be facing challenges – but they’re certainly not going to give up. Rather, they will find new ways to push forward and achieve the results they’re striving so hard for.


Heath Fitzpatrick is COO at ebroker. Growing up within a small family business, and then moving into starting a number of his own, Heath has a lifetime of exposure to small and medium businesses. After securing qualifications, he started working in his family business then is own; maximising efficiency and streamlining processes before joining the finance industry.

ebroker is Australia’s first fully independent, transparent matching platform where anyone can find and compare unsecured small business loans. Now working with over 70 non-bank lenders.

Related Articles
keys to success for businesses and companies Featured | Small Business
What are the keys to success in business?

Although all businesses aim high at the beginning of their journey, the reality is that only a small proportion of companies will make it to their intended success. Most businesses founded today are destined to become another failure statistic. At the Keys to Success event held by business management service Catapult, Mike Boorn Plener, the Read More…