The so-called gig economy, freelance workers, and sole proprietors are getting a lot of attention these days from the fintech and payments industry. And they could use some help. Workers who don’t receive a regular paycheck will often find getting approved for banking services through a traditional provider doesn’t always work.
Even though these individuals can substantiate earnings through tax returns, the lack of steady payments through an employer doesn’t fit well with existing account opening and risk assessment systems. This can make getting credit, refinancing a home, or opening other accounts difficult.
The American Banker takes a look at some fintech companies that are helping to close this gap and are attracting not only customers, but investors as well. The article includes:
Yair Levy and a few fellow entrepreneurs were sharing a co-working space when they realized they all had something in common: cash-flow challenges.
It dawned on Levy that there was a financial services market in the small-business operators and freelancers who operate in flexible workspaces and often struggle to make ends meet. He formed a startup, Salaryo, to cater to this market.
Joust Labs, another fintech serving freelancers, entrepreneurs and gig-economy workers that launched in public beta in January, has also been growing. Close to 2,700 small-business owners and freelancers now use it. It recently raised $2.6 million in a seed funding led by PTB Ventures. The round, which will be used to expand the neo bank, was also backed by Accion Venture Lab, Financial Venture Studio and Techstars.
Joust allows freelancers and other small-business customers to get advances against their unpaid invoices. This feature, in keeping with the theme of jousting knights, is called PayArmour.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group