Here’s a method that could help you borrow money quickly, even if you’re self-employed.
If you own your own business, no matter what size, cash flow can be difficult and can put a strain on your personal finances. Self-employed people who aren’t eligible for conventional forms of credit such as personal loans or credit cards, or who need money quickly, can consider short term loans as an alternative.
If you find yourself in this position, there are options out there. Find out more in our guide below.
Cash Money Payday Loan
- Minimum loan amount: $50
- Maximum loan amount: $1,500
- Loan term: 12-14 days. Vary by province
- Turnaround time: Within 2 hours with INTERAC e-Transfer® if approved
- Key requirements: Be 18+ years old, provide proof of recurring income
Are you eligible for a short term loan if you’re self-employed?
Short term lenders have more flexible lending criteria than banks or credit unions. To increase your chances of approval, you’ll need to show evidence of a regular income, which you can do by supplying 90 days worth of bank statements. Some lenders won’t consider self-employed applicants, but others will, so do your research and discover which ones will let you apply. You can check the eligibility criteria before you apply, and if you have any questions or concerns, contact the lender to find out more.
You will usually need to meet the following criteria in order to get a loan, however lenders may have additional criteria that you must meet.
- Be 18 years of age, or the age of majority in your province or territory
- Be a Canadian citizen or permanent resident
- Have proof of an income
- Have a valid bank account
Comparison of loans for the self-employed
Here are some loan providers that you can apply to. Note that the maximum loan amount is based on the lender’s maximum amount and will vary based on your province of residence. Check the websites of any lenders you’re interested in to confirm they operate in your province.
How does a short term loan for self-employed people work?
These loans are usually available in small amounts, such as $500 or less. However, you can also get short term loans for up to $2,000, depending on the lender.
Lenders will look at your banking history if you’re self-employed. They’ll work out a repayment plan for you or let you select repayment terms that work with your budget. In terms of eligibility, you may be asked for additional documents to verify your income since you likely won’t have regular paycheques.
How you can compare your short term loan options
- How much you can borrow. When applying for a short term loan, you can typically expect to receive any amount between $50 to $2,000, although this is subject to any provincial/territorial rules and regulations, as well as your ability to repay your loan.
- The fees you’ll be charged. Fees vary by lender and can include things like establishment fees or early repayment fees. Be sure to read these details before submitting a loan application.
- How long you’ll have to repay the loan. In some cases, you have to repay the borrowed money in as little as two weeks, however you may have up to three months or longer in some instances. Make sure you can afford the repayment terms, and if not, re-consider taking out the loan altogether.
- What fees apply for late repayments. Failing to pay back your loan on time could result in late payment penalties. Lenders often charge a fee if you don’t make your repayments on time. It’s always a good idea to compare late fees too, especially if you think you might be late with any of your repayments.
What are the benefits and drawbacks of these loans?
- Easy availability. Even though some lenders don’t offer short term loans to self-employed people, lenders who will make funds available are still relatively easy to find.
- Bad credit accepted. To be eligible for a short term loan, you generally don’t need a good credit history. Lenders focus on your ability to repay the loan, instead of your credit score or history.
- Quick access to funds. In many cases, funds can be transferred into your bank account within 24 hours.
- Fees and charges. Carefully go through all of the associated fees and charges before applying for a short term loan. Fees and charges you might have to pay include application fees, account-keeping fees, settlement fees, early repayment fees and late charges, among others.
Is there anything you should avoid?
- Applying for too many loans. Remember that loan applications count as an inquiry on your credit report, knocking around 5 points off per inquiry. Avoid applying for too many loans if your first application isn’t approved right away.
- Accumulating debt. Getting a short term loan requires that you repay it on time. If you don’t, you’ll only end up accumulating debt. Remember to budget for your loan repayments before you sign on the dotted line.
Are payday loans legal in my province or territory?
Payday loans are available in all provinces and territories across Canada. You should be aware that payday loans are regulated by individual provinces, which means costs and fees can vary. Ensure that any lender you choose abides by the laws of the place you live.
At the time of writing in January 2019, Newfoundland and Labrador, the Yukon, Nunavut and the Northwest Territories do not have legislation regulating payday loans at the provincial or territorial level. Payday loans are regulated in these provinces and territories at the federal level only.
- Need to borrow a loan of up to $5,000?
- Looking for a low interest short term loan?
- Want to learn more about payday loans in Canada?