Ask any freelancer who has tried to secure a loan or get a mortgage through a traditional bank what their experience was like and you’ll likely be met with groans of frustration.

That’s because traditional banking doesn’t often take into account the unique needs and flexible situations of those who are self-employed. 

But with more and more people turning to self-employment, banking needs to meet people where they are and adjust accordingly.

Here’s what the banks get wrong about finances when it comes to self-employment.

Being self-employed does not equal risk

Banks are usually of the mindset that being independent means you have a variable income. Because of this, they typically require you to provide proof of a steady income for a certain period of time if you’re trying to get a loan or sometimes even open a bank account. 

“I think the most common misconception [of self-employment] is that we are a ‘risk’ to take on because we are not necessarily backed by a company or large funds,” says Jayme Markus, a Chicago-based branding and web designer and founder of Pageless Studio.

While your income may vary from month to month, that doesn’t mean independents don’t have the funds to pay the bills. A W2 shouldn’t be the determining factor between opening a new bank account or applying for a loan.

The process isn’t easy or transparent 

Even if a bank does provide loans or funding options to self-employed people — whether for business or something personal like a mortgage — they certainly don’t make the process easy or transparent. 

“I decided to switch my business bank accounts to a new bank based on this bank saying they provide business loan opportunities for new businesses,” says Jayme. “However, upon starting the loan application process they told me that they only provide loans after you've had accounts open with them for a year. The lack of transparency was very frustrating.”

Freelancers shouldn’t have to jump through hoops to open a bank account or get funding for their business. Hidden fees, high account minimums, and a lack of transparency around securing loans unnecessarily hold people back from starting or scaling their businesses. 

In the world of self-employment, transparency is essential.

A seamless setup is key

Another thing traditional banks and payment processes tend to get wrong is the lack of seamlessness when it comes to setting up and connecting everything you need to manage your finances. The number of platforms freelancers must juggle in order to track their income, spending, and accounting is challenging enough. 

When it comes to managing your finances when you’re self-employed, a seamless banking experience is essential, not only to get up and running but to better conquer your cash flow. 

Jayme also recommends opening a business bank account for the purpose of keeping your finances organized. “Make sure you open a separate checking and savings account for your business,” she says. “This will help leaps and bounds with your business accounting for tax purposes, and also will help give you a sense of how much money is flowing in and out.”

With more people turning to self-employment, a better banking solution is essential to make sure independents can secure the funds they need to start and scale their businesses.