ABA Banking Journal
No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
SUBSCRIBE
ABA Banking Journal
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
No Result
View All Result
No Result
View All Result
ADVERTISEMENT
Home Commercial Lending

Banking Millennial Entrepreneurs: Focus on Speed, Transparency and Loyalty

January 18, 2017
Reading Time: 4 mins read

By Evan Sparks

Small business loans are the bread and butter of banking—especially for community banks. Loans to non-farm businesses and commercial real estate loans account for just under half of community bank loans, compared to 38 percent for the banking industry overall.

But as business lending remains a critically important part of the community bank portfolio, small businesses are increasingly in the hands of younger, less seasoned business owners and entrepreneurs—many of whom are looking outside of the banking sector for their growth capital.

Approximately a quarter of millennials—those aged roughly 18 to 36—earn income from a business in which they own a stake. This could be anything from a side hustle as a website developer to Mark Zuckerberg as CEO of Facebook. To clarify, numbers from a Wells Fargo survey indicate that about half of millennial small business owners have at least one employee besides themselves; 16 percent of them employ at least six people.

The vast majority of millennial business owners started their own businesses, and three quarters are in a startup phase or a growth phase. As they grow, though, few—less than one in five—are relying on commercial financing from banks. And in the future, more than half of these younger business owners say that new digital financial tools and nonbank offerings mean they will be less likely to use a bank.

A need for speed

Ryan Wilson is co-founder and CEO of the Gathering Spot, a private city club near downtown Atlanta that caters to younger professionals and entrepreneurs. With a restaurant, event rental space and co-working zone, the club—opened in 2015—is a modern rethink of the longstanding tradition of center city member clubs. And yet, when he was in startup mode, “we didn’t feel like banks had a good understanding of our business,” even though “what we were building would have been a good candidate for bank financing [with] tangible assets. But we didn’t get that far in the process.”

Ryan Wilson

As a result, Wilson relied on a $3 million equity raise from private investors. The Gathering Spot has quickly proven a hit in Atlanta, and Wilson is looking to expand the concept in cities like Charlotte, Houston and Dallas. When asked about whether he would consider working with a bank for future financing, he explains that the club now has “a track record that a bank could study,” but that “I could see us going forward without a bank.” He adds that his club customers—overwhelmingly younger business owners and entrepreneurs—are approaching their financing the same way that he did, “looking for private investors, and not having much interaction with a bank at all.”

Why not? It all comes down to transparency and speed. “We felt like underwriting was a black hole,” he explains. “And if it was going to be a ‘no’ [from the bank], we wanted to get to that point quickly.”

Dutch McNeal and Sam Sports have a very different business but a similar perspective on the need for speed and transparency. In 2009, the University of Georgia graduates purchased an insurance agency in Waycross, a small town in rural south Georgia. They worked with a local community bank on financing to purchase the company, but McNeal said that at the last minute before closing, the bank pulled the deal. “It wouldn’t hurt my feelings from day one if they said, ‘I don’t think that’s going to work,” he explains. “They strung us along.”

“There’s an idea that as millennials, we can’t take the ‘no,’” adds Wilson. “No is fine! We just want to get there faster.”

Loyalty earned

Dutch McNeal

McNeal and Sports ended up raising funds from family members to purchase the agency, but they later turned to another community bank for an asset-based note to pay back the family loans and a property loan to expand their business. They worked with a thirty-something banker they got to know through the Jaycees, and he has won all of their loan, deposit and trust account business.

“We probably could have gotten a little better rate somewhere else, but I wasn’t even going to talk to anyone else, he was just so good to us from the get-go,” says McNeal. Sports adds that it’s a “good mutual relationship,” with both bank and agency sharing referrals with each other.

Loyalty is a big theme for millennial business owners. Eight in 10 prefer to do all their business banking with one institution, so banks can win long-term business with early openness. “For an entrepreneur in the early stages of the business, if a bank shows any amount of confidence, I would personally stay there,” says Wilson.

Opportunities for bankers

Sam Sports

Beyond greater transparency about the lending and underwriting process, and a faster turnaround, younger entrepreneurs want to see a willingness to listen and be open to innovative business models. “If we were opening a Subway, one of the banks told us, ‘I would do this deal all day,’” Wilson says.

ADVERTISEMENT

Another opportunity: retirements. There are “lots of aging owners and they don’t know what they’re going to do when they retire,” McNeal says. For the millennials who would be good candidates to, as he and Sports did, buy these businesses, the biggest hurdle is “thinking you can’t get financing.”

Bankers also have an opportunity to become trusted financial advisers for their business customers. Right now, according to the Wells Fargo study, only 10 percent of millennial entrepreneurs say their banker is a “major influence” on financial decisions, and just 3 percent say he or she is the “biggest influence.” And yet, for McNeal and Sports, because of the trust they have in their banker—and the trust he placed in them—they view their banker as their “gatekeeper” on big financial decisions.

The expertise that seasoned lenders bring is attractive too. “I would actually prefer to work with someone who has a little more experience,” says Wilson. “Given some of the challenges we’re facing [in business growth], I’d like to talk to someone who’s seen that scenario before.”

Millennial entrepreneurs face many headwinds, from a sluggish economy to student debt burden to a harsher regulatory environment. By taking time to listen, speeding up processes wherever possible, increasing transparency and being open to new ideas, business bankers can ensure that access to bank financing doesn’t become one of those headwinds.

Tags: MillennialsSmall business lending
ShareTweetPin

Author

Evan Sparks

Evan Sparks

Evan Sparks is editor-in-chief of the ABA Banking Journal and senior vice president for member communications at the American Bankers Association.

Related Posts

ABA, associations urge lawmakers to finalize deal on debt ceiling

Resolution to overturn OCC bank merger rule clears House

Community Banking
May 20, 2025

The House voted in favor of a Senate resolution to overturn a 2024 final rule that changed how the OCC reviews proposed bank mergers. The legislation heads to President Trump for his signature.

OCC sees need for regulatory reform in bank merger process

First National Bank in South Dakota to buy Wyoming Bank & Trust

Community Banking
May 20, 2025

First National Bank in Fort Pierre, South Dakota, has agreed to buy Wyoming Bank & Trust in Cheyenne.

FDIC: Number of unbanked households drops to new low

Kansas City Fed economist: Bank On may have reduced unbanked rates

Community Banking
May 19, 2025

An increase in the number of financial institutions offering Bank On-certified accounts may have contributed to the decline in unbanked households by lowering barriers to account ownership, according to new research.

Did you know that the federal government is a major source of bank balance sheet volatility?

Commercial Lending
May 15, 2025

How tax payments and entitlement spending make balance sheet management trickier.

Bankers urge lawmakers to ease regulatory hurdles for de novo bank formation

Bankers urge lawmakers to ease regulatory hurdles for de novo bank formation

Community Banking
May 14, 2025

The founders of two de novo banks shared with lawmakers the challenges of launching a new financial institution in the current regulatory climate, and they pushed for legislation to ease some of those burdens in the early years...

ABA comments on proposal to improve accounting in tax credit structures

House committee advances tax package with ABA priorities

Ag Banking
May 14, 2025

The House Ways and Means Committee voted along party lines to advance a federal budget reconciliation tax package that includes several of ABA's policy priorities

NEWSBYTES

Survey: Majority of financial institutions deploying generative AI

May 22, 2025

#PracticeSafeChecks campaign wins two Telly Awards

May 21, 2025

Proposed amendment would add credit card rate cap to Senate stablecoin bill

May 21, 2025

SPONSORED CONTENT

Choosing the Right Account Opening Platform: 10 Key Considerations for Long-Term Success

Choosing the Right Account Opening Platform: 10 Key Considerations for Long-Term Success

April 25, 2025
Outsourcing: Getting to Go/No-Go

Outsourcing: Getting to Go/No-Go

April 5, 2025
Six Payments Trends Driving the Future of Transactions

Six Payments Trends Driving the Future of Transactions

March 15, 2025
AI for Banks: A Starter Guide for Community and Regional Institutions

AI for Banks: A Starter Guide for Community and Regional Institutions

March 1, 2025

PODCASTS

Podcast: Accelerating banking for quick-service restaurants

May 8, 2025

How a Georgia community bank supports government-guaranteed lending nationwide

May 1, 2025

Podcast: Quantum computing’s shakeup in payments, cybersecurity

April 24, 2025
ADVERTISEMENT

American Bankers Association
1333 New Hampshire Ave NW
Washington, DC 20036
1-800-BANKERS (800-226-5377)
www.aba.com
About ABA
Privacy Policy
Contact ABA

ABA Banking Journal
About ABA Banking Journal
Media Kit
Advertising
Subscribe

© 2025 American Bankers Association. All rights reserved.

No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive

© 2025 American Bankers Association. All rights reserved.