The New American Dream: Why Community Financial Institutions Must Embrace Gig Workers, Solopreneurs, and Micro-Businesses

Our last blog focused on The Low Hanging Fruit You Might be Missing: Why Serving Local Businesses Is More Critical Than Ever for Community Financial Institutions, but what about even smaller businesses? New data shows that the traditional career ladder is being replaced by many Americans with a new model of work built on flexibility, independence, and entrepreneurial spirit. This shift represents both a fundamental restructuring of the American workforce and a massive opportunity for forward-thinking community banks and credit unions. So could focusing on the smallest business be your best bet for growth?

The Rise of Independent Work: More Than a Trend

The numbers tell a compelling story. Over 70 million Americans now participate in freelance work according to Forbes, representing approximately 36% of the entire U.S. workforce. This number is set to increase even more in the near future, with projections suggesting freelancers will comprise more than half the workforce by 2027.

Even more striking is the transformation in how people view independent work. The number of full-time independent workers more than doubled from 13.6 million in 2020 to 27.7 million in 2024. These aren't just people picking up “side hustles” for extra cash, often they're professionals who have made freelancing their primary career path, building sustainable businesses and cultivating long-term client relationships. This has become especially true in light of recent tech layoffs, says Inc, with many executives turning to fractional leadership roles both for better work life balance and to help businesses grow at an early stage, when full time executives may not be necessary or affordable.

The gig economy is projected to be valued at $582 billion in 2025, growing to more than $2 trillion by 2034 based on one report. This represents one of the fastest-growing segments of the economy, expanding at a compound annual growth rate exceeding 15%. It also represents a huge opportunity for community financial institutions to cater to a very specific audience and their needs.

Who Are These New Entrepreneurs?

The Solopreneur Revolution

In 2024 alone, entrepreneurs filed 5.2 million new business applications, and more than four in five small businesses operate with no employees. These solopreneurs aren't struggling startups but rather intentional business models chosen for the autonomy they provide.

Women and immigrants are powering this trend in particularly significant numbers. Over half of new solopreneurs are women, and immigrants are 80% more likely to start businesses when compared to U.S.-born citizens. These entrepreneurs cite "being my own boss" and "work according to my own schedule" as their top motivations, far outpacing immediate income considerations.

High-Earning Independents

The perception that gig work means low income is outdated. Forbes reports that over 4.7 million independent workers earned more than $100,000 in 2024, a dramatic increase from 3 million in 2020. The average annual pay for a freelancer in the United States is just over $108,000, which is well above the median personal income of just under $84,000.

These high earners demonstrate that independent work has evolved from supplemental income to viable, lucrative careers. Professionals with specialized skills in technology, marketing, consulting, and professional services can command premium rates while maintaining the flexibility that drew them to independent work in the first place.

The Demographics of Independence

Millennials and Gen Z are driving growth, with 70% of freelancers globally are under age 35. This entire generation is reimagining work, life, and the banking needs that go along with this shift. They're integrating AI tools into their workflows, building personal brands, and creating portfolio careers that would have been impossible a decade ago.

Why Traditional Banking Falls Short

Despite their economic significance, gig workers and solopreneurs often find themselves poorly served by traditional banking models.

The Business-Personal Banking Gap

Solopreneurs occupy an awkward middle ground. Their financial needs exceed typical retail banking offerings, but they don't fit the traditional small business profile that many commercial banking platforms assume like multiple employees, significant inventory, complex payroll needs, etc.

This gap means they're often directed to consumer accounts that don't provide the business-specific features they need, or commercial accounts with fees and requirements that don't match their business model.

Cash Flow Challenges

Nearly 77% of solopreneurs report profitability in their first year, but cash flow management remains their biggest challenge. Unlike salaried employees with predictable paychecks, independent workers face irregular income, delayed payments from clients, and the need to manage business and personal finances simultaneously. Traditional banking products rarely account for this reality. 

Small business loans often require extensive documentation, lengthy approval processes, and may not align with the rapid cash flow cycles of project-based work. By catering to these unique needs, community FIs have a huge potential market to tap into.

The Financing Paradox

84% of solopreneurs who needed startup financing used personal funds either from their own savings or from personal credit cards. This suggests a significant gap in accessible business financing for independent workers.

Many gig workers and solopreneurs would benefit from working capital solutions, but traditional underwriting models struggle to evaluate their creditworthiness. Without W-2s, traditional business addresses, or lengthy operating histories, they often don't fit standard lending criteria despite profitable operations and strong personal credit histories. This is where relationship based banking, which community FIs excel in, can benefit the business based on the owner’s credit.

The Opportunity for Community Financial Institutions

Community banks and credit unions are perfectly positioned to serve this growing segment if they adapt their approach. Here's how:

Reimagine Business Banking for Modern Work

Create business banking products specifically designed for solopreneurs and micro-businesses. This can mean anything from lower fee structures that reflect simpler operational needs and streamlined account opening that doesn't require extensive documentation to mobile-first platforms that enable banking anywhere, anytime to align with the lifestyle of a solopreneur or gig worker, or even going so far as deep integration with the tools independent workers already use to make their lives easier. Integrations with invoicing software, payment processors, accounting platforms, and scheduling apps can take significant administrative burden off the worker and alleviate stress so they can focus on the work that they love.

Develop Alternative Underwriting Models

Community institutions should leverage their relationship banking strengths to develop credit models that work for gig workers. This could include considering multiple income streams rather than single-source employment, using cash flow analysis rather than traditional financial statements, or offering smaller, more flexible credit lines that match project-based cash flow cycles. All of these solutions, though simple, can help bring value to gig workers and attract more to your FI. Evaluating digital payment histories such as PayPal or Venmo, can also help paint a more comprehensive picture of a solopreneur or gig worker’s financial stability and eligibility for credit.

Provide Financial Guidance for the Independent

Many solopreneurs lack formal business training and would greatly benefit from financial guidance. Community financial institutions can differentiate by offering education and support on things like tax planning, retirement planning, and how to separate their personal finances from those of their businesses, advisory services, or by helping create a community of gig workers by organizing meet ups or in person education sessions where they can interact with each other and learn from one another.

This consultative approach builds relationships and positions the institution as a true partner in the entrepreneur's success.

Create Community for the Independent

One of the biggest challenges solopreneurs face is isolation. In addition to organizing educational meetups as suggested above, community FIs are uniquely positioned within the community to drive events like networking sessions, offering space in the branch to be used for coworking, or building online communities to encourage connection.

These efforts strengthen community ties while demonstrating the institution's commitment to supporting independent workers.

Real-World Benefits

The benefits of serving this market extend beyond the direct relationship. The most obvious benefit of serving solopreneurs and gig workers is deposit growth. Independent workers need places to hold operating funds, client payments, and savings. With 93% of solopreneurs expecting profitability in 2025, these accounts can be substantial and stable. They also often need multiple products like business checking, savings, credit cards, credit lines, retirement accounts, and eventually mortgages and wealth management as their businesses grow, opening up cross-selling opportunities.

There is also a high potential for business growth, today's solopreneur may be tomorrow's employer business. Building relationships early creates loyalty that persists as businesses expand and needs become more complex. This isn’t just a win for your institution, the growth of these businesses strengthens your communities by supporting local economic diversity and resilience. These entrepreneurs often serve local clients, keeping economic activity within the community.

The Competitive Imperative

While underserved, that doesn’t mean that solopreneurs and gig workers are not on the radar of your competitors. Fintech companies like Wave and BrightBook are already seeing the opportunity and starting to target this market. Even big players like Quickbooks are releasing products specifically targeted at freelance workers. Platforms specifically designed for freelancers offer integrated banking, invoicing, tax support, and benefits administration, while some digital-only banks like Lili and Novo are providing business accounts with no fees and instant approvals.

If community institutions don't move to serve gig workers and solopreneurs, you risk losing an entire generation of potential business customers to competitors who better understand their needs.

Getting Started

Community banks and credit unions can begin serving this market by:

1. Conducting market research to understand the independent workers in their community including their industries, needs, and pain points.
   
   
2. Partnering with specialized business banking technology providers that offer platforms designed for modern, digital-first business customers.
   
   
3. Training staff to understand the unique financial situations of independent workers and how to evaluate their creditworthiness.
   
   
4. Developing targeted products starting with basic business checking and savings, then expanding into credit and advisory services.
   
   
5. Marketing intentionally to gig workers, solopreneurs, and micro-businesses through digital channels and community partnerships.
   
   

The Future Is Independent

The rise of gig work, solopreneurship, and micro-businesses is becoming the new normal. These independent workers represent a massive, growing, and underserved market that aligns perfectly with the relationship-based, community-focused approach of community financial institutions.

By embracing this opportunity now, community banks and credit unions can build relationships with a new generation of entrepreneurs that will help generate sustainable growth in deposits, loans, and fee income. It will also help community FIs differentiate from larger competitors and strengthen the economic fabric of their communities/

The new American Dream looks different than it did a generation ago. It's built on independence, flexibility, and entrepreneurial spirit. Community financial institutions that recognize and support this shift will thrive alongside the workers and businesses reimagining what it means to build a career in America.