The Dudley Building Society has called on advisers not to consider self-employed cases as any more difficult to place than employed cases.
The mutual says it is determined to end the perception that the self-employed have to be considered as a greater risk than those who are employed, especially considering that over 15% of the UK population are self-employed.
Sam Ward (pictured), commercial director at the Dudley, said: “There is still a historic view about how employment is seen to be safer than going out on your own and certainly new ventures are vulnerable in the early days. Office for National Statistics’ figures on company failure claim that c.80% of them cease trading within the first year. Yet that doesn’t take into account the majority of self-employed who start out as sole traders and do not fit the ONS definition. Our experience of small business owners is in fact very positive and certainly not the heightened credit risk they get painted to be.
“I think the other reason they are treated differently by many of the large lenders, is that it’s harder for the computer to write an algorithm sophisticated enough to say yes. Therefore the self-employed applicant needs a more manually underwritten approach. That is why smaller lenders, like Dudley, are more likely to look more positively on self-employed applications.
“Our message to advisers is a simple one. Dudley’s only mandatory requirement for self-employed applicants to access our full product range, is two years’ accounts. After that they are treated exactly the same as any other applicant, where we manually underwrite every case. For those that have less than two years accounts, we offer a self-employed specific product.
“I would urge advisers to look towards smaller lenders like Dudley as the natural home for self-employed customers, so we can start to close the discrimination gap once and for all.”