Banks have often been very restrictive towards self-employed clients
In the past, banks have often been very restrictive towards self-employed clients when they need a loan. For example, it has long been the case in banker circles that the default risk in this client segment is higher than for private customers with income from non-independent activities.
This, in turn, meant that there was little standardization in application processing. As a result, the processing costs for loans for self-employed persons were significantly higher than in the automated mass-market. As a result, an unfavorable business culture was established between banks and their commercial customers.
The latter still assume that the chances of obtaining a loan from the house bank are low. But this is no longer necessarily so. In recent years, a turnaround has begun in the lending business. Banks protect their self-employed customers significantly more creditworthy today than just a few years ago.
One reason for this is probably that the risk of default is not really higher compared to employees. After all, even today, employee relations no longer offer absolute security. Moreover, a large part of the credit losses are not directly attributable to economic developments. Very often, however, changes in the personal environment or too careless handling of consumer loans are the cause of bankruptcy. But these are risks that self-employed customers do not find more often than employees.
Loans for the self-employed are therefore easier today than they were a few years ago.
Not only the chance of an actual payout has increased significantly. Also with regard to the brocratic authorities, experts and industry insiders see significant improvements. Just a few years ago, the last 5 income tax returns had to serve as proof of income, but nowadays a single income tax assessment often suffices.
Even with regard to the design possibilities of their financing, self-employed people have to accept practically no disadvantages. Loans up to 50,000 euros are paid out without proof of the funds being used. Self-employed persons are not divided into different groups: craftsmen receive loans as well as freelancers.
Since the risk of default on the part of the banks is no longer significantly higher than that of loans to employees, and more and more (cost-reducing) standardizations are enforced in the application process, self-employed persons do not need to exorbitantly add risk to their loan.
The fact that there is still a great deal of pessimism about lending, particularly among self-employed customers, is explained by banks and experts with the media coverage of an alleged looming credit crunch.
Of the developments mentioned, smaller companies with a maximum of 20 employees are not affected – only medium-sized traders with 100 and more employees suffer from some bottlenecks as a result of the financial crisis.