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. People who aren’t eligible for conventional forms of credit such as personal loans or credit cards, or who need the money more quickly, can consider short term loans as an alternative. If you’re in this position, find out what your options are in the guide below.
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 need to do by supplying 90 days worth of bank statements. Some lenders won’t consider self-employed applicants, but others will. You can check the eligibility criteria before you apply.
How does a short term loan for self-employed people work?
These loans are usually available in small amounts, such as $500. But you can also get short term loans for up to $2,000.
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 to work with your budget. In terms of eligibility, you may be asked for additional documents to verify your income since you won’t have regular paystubs.
Comparison of loans for the self-employed
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 the lender looking through your financial situation.
- 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. Make sure you can afford the repayment terms.
- 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 is you don’t make your repayments on time. It’s be a good idea to compare these too, if you think you might be late with any of your payments.
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, they’re 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.
- 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 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.
Is there anything you should avoid?
- Applying for too many loans. Remember that loan applications count as an inquiry on your credit report. Avoid applying for too many loans if you aren’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.
What’s next?
- Need up a loan up to $5,000?
- Want a loan you can pay back in up to 2 years?
- Looking for a low interest short term loan?
