Financiers may be denying freelancers loans at own cost

The other day, I was chatting with the business development manager of a bank which was established to serve small and micro-enterprises as its main customers. I wanted to know from the official if they recognise professional consultants as small entrepreneurs, the type whose work and workstations are so mobile that they operate from where their work takes them. She told me that, at least in her bank, only enterprises with brick and mortar “fixed abode” are recognised when it comes to provision of credit facilities.

I pressed further by asking her if such a consultant would be considered for a loan if they were to demonstrate on paper that they have consistently served reputable clients for a period of say two or more years. She was categorical that a history of professional service and current contracts that a consultant or freelancer might be having cannot form the basis for the award of a loan by her bank. In the absence of an office, where tangible chattels could be used to secure the loan, freelancers are not eligible for loans.It struck me that this category of entrepreneurs might be the ones that banks have been ignoring to their disadvantage. Expert freelance consultants, like individuals who are formally employed, constitute a significant pool of potential customers for banks and the size of the pool is growing.

The client-consultant relationship has become significantly formalised in recent years to the extent that contracts between them are watertight enough to be recognised in courts of law.

The type of workers that some years back were referred to “briefcase consultants” is a dying breed. While today’s expert consultant might walk around with briefcases, or more commonly with backpacks slung over their shoulders, services that they offer are highly valued by an increasing variety and number of organisations including government ministries and agencies.

Alongside this evolution has been a significant increase in amounts of money that change hands between organisations and consultants. Many of these individuals may not necessarily have physical offices because their work does not require them to be rooted in one place. After all, technology makes it possible to contact them and track the progress of work on a 24-hour basis.

As firms re-engineer and restructure in the face of changing technologies and work culture, many professionals are entering this consulting space and it may be time that banks took notice and created avenues to tap into that emerging customer base.

Another aspect that banks need to be alive to is that many jobs are becoming obsolete and will disappear in the next two decades. Workers who were trained in jobs threatened with obsolescence will therefore have to retrain for alternative career pathways.

Banks that seek to serve the future worker will have to begin looking at this category of workers from a new perspective. They might be missing a lucrative income stream that could well set them apart from their competitors.

The writer is a development communication consultant.