The importance of finances in business is everything, and the safety and maintenance of company funds is paramount in upholding a successful enterprise. Because of sheer importance of looking after a company's economics, accountants and financial advisors have great responsibilities in delivering sustained and quality services.
When a modern day professional decides to break into the world of sole trading, whether this be through contracting, freelancing or working as an interim manager, setting up and maintaining a limited company is crucial in any chance of success. Historically, limited company professionals have been held in a different light in comparison to traditional business owners, seen by banks and other providers as inferior to the larger business. This backwards trend is beginning to subside however, as financiers and backers are recognising limited company 'one man bands' as legitimate enterprises more so than ever before.
Very recently, Halifax lifted a very large barrier on contractors regarding mortgages, allowing many professionals from many industries the ability to apply and be granted proper mortgages despite being technically self-employed.
This marked quite a turning point in the mind set and opinions of many, and proved that there is light at the end of the tunnel for those contractors who have been left in the dark financially over the years. This now poses the question: Are other lenders inclined to become more lenient in their treatment of contractors?
The short answer to this is yes, and it will become apparent that those lenders that opt for a similar approach to underwriting will follow suit in leniency on limited company contractors. This shared viewpoint isn't a million miles away from being a common reality however, with already a growing number of other contractor friendly lenders considering contract workers, but they usually require a large amount of security and job stability (commonly a minimum of two years constant contract history).
This bold new initiative from Halifax is great news for those within the contracting community, as unlike other banks, they will consider an individual from the start of their first contract as opposed to requiring a 2 year existing position. Not only does this mark a change in opinion concerning contractors, but it shows that businesses are responding to the increasing number of limited company professionals entering the market, thus having a financial impact.
Speaking to John Yerou, managing director at Freelancer Financials and contractor finance expert, he reiterates the need for available finance, "We're in constant talks and negotiation with other lenders to open their doors to all professional contractors regardless of the field they specialise in."
The truth of the matter is that for the past decade, contractors and temporary workers have been considered as 'high-risk' by money lenders and financial enterprises across the country. This pattern resulted in a reluctance to lending, despite the higher premiums contractors earn, creating problems for limited company owners concerning loans, mortgages and start-up gains. It is refreshing to see that this ideology is now shifting, allowing contractors (and their businesses) to flourish.
