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Loans for self-employed

Predictable income or not, if you can meet certain requirements, there are personal loans for self-employed workers.

If you own a business, are a freelancer or a gig worker and need to borrow money, you might wonder if you qualify for a personal loan. The answer is probably, but you’ll need to prove your income, and some lenders may be more cautious about self-employed workers.

“Lenders want a guarantee that they’ll get their money back,” explains Zachary Jonas, founder and CEO of Jonas Consulting Group. “They’re looking for proof that you’re making enough money consistently, which is challenging for freelancers, contract workers and gig workers because their income can fluctuate.”

Read on as we explore the ins and outs of loans for the self-employed and a few alternatives.

Personal loan requirements for the self-employed

Because you don’t necessarily work in a job that provides a predictable income, you may need to meet additional requirements and jump through a few more hoops compared to borrowers with a traditional source of income.

  • Proof of income. Lenders typically require more than just your last few pay stubs or bank statements if you’re self-employed. This may be more challenging if self-employment is a relatively new status for you.
  • Credit score. Lenders that offer loans to the self-employed may require higher credit scores than applicants with more traditional jobs. Plus, they’ll likely scrutinize your overall credit history, including the types of loans or credit you’ve had in the past, how you managed them and your history of on-time payments.
  • Monthly expenses. Lenders often require information about your rent or mortgage payment and current debt obligations.
  • Cash reserves. When your income is less predictable, lenders might like to see that you have money set aside or an emergency fund to draw on during leaner times.
  • Employment history/field of work. Lenders may ask how long you’ve been self-employed, what your past work history includes and if your current career path is sustainable. For example, if you used to work for an accounting firm and have now started your own accounting business, you may be considered a less risky candidate than someone who has switched fields entirely.

What documentation do I need to provide?

When you’re self-employed, a lender may require more documentation to prove your income than it would for other borrowers. This might also depend on the size of the loan you’re seeking.

  • 1099s. If you’re a freelancer or contract worker, taxes are typically not withheld from your pay. A lender may want to look at your 1099s to see your total compensation from employers or clients.
  • Tax returns. Lenders could also ask you to provide federal tax returns for a couple of years to verify your taxable income. If you own your own business, you may also need to show your business tax returns.
  • Bank statements. Bank statements give lenders an idea of your typical monthly cash flow, and a few months or more could be required as part of your loan application.
  • Court-ordered documents. If you receive income from alimony or child support, a lender may need proof of that guaranteed income.
  • Investment income. If you derive some of your earnings from rental properties or other investments, you may need to provide documentation to prove it.
  • Profit and loss statements. A lender might ask for profit and loss statements if you own a business.

How to apply for a loan when self-employed

It’s important to do your research and make sure you have the necessary documentation to apply for a personal loan as a self-employed borrower.

  1. Define your loan amount. Figure out exactly how much you want to borrow, and don’t take out a loan for more than you need.
  2. Check your credit score. Knowing your credit score can help you find lenders that fit your needs. For example, if you have a poor credit history, look for lenders that work with borrowers with bad credit.
  3. Compare multiple lenders. Search for lenders that work with self-employed borrowers at the loan amount you’re looking for. You might start by checking with your current bank or credit union since you already have a history. Be sure to compare interest rates, loan terms and fees.
  4. Get prequalified. If possible, get a few quotes based on your prequalification to find the best deal.
  5. Gather your documents. Learn the lender requirements for your loan and make sure you have all the required documents on hand.
  6. Apply. Once you have everything you need, fill out the loan application and wait for a decision. Many personal loan lenders may approve your loan the same day you apply.

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Personal loan challenges for the self-employed

A few issues specific to self-employed borrowers could cause a snag with your loan application.

Inconsistent income

When you’re self-employed, it’s common to have irregular income. You might have multiple clients, pay schedules can vary or your work may be affected by the seasons or other factors. However, you should be able to overcome this obstacle by providing a few years of tax returns to show you’ve consistently made enough money to afford the loan. It’s also not a bad idea to enlist the services of an accountant, suggests Jonas.

“It’s so helpful to have an accountant even if you are a freelancer because they can keep an organized record of your earnings and tax filings. Most banks also see an accountant as an added source of trust for the loan applicant.”

Lower taxable income

Self-employed borrowers pay their own income taxes, Social Security, Medicare and self-employment tax, but they can take deductions for business expenses. For example, you may be able to take deductions for a home office if you work out of your house, mileage if you travel for work or other business-related expenses. The result is a lower reported taxable income, which could negatively affect your loan application.

“While deductions are great for lower taxes, they can impact your ability to get a loan. Banks aren’t just looking at your gross income — they want to know what you’re bringing home after all your expenses,” says Jonas. “So let’s say you bring in $25,000 in revenue but have $10,000 worth of deductible expenses. The bank will consider your income as $15,000.”

Tips to increase approval odds for self-employed borrowers

Here are some things to do to improve your chances of loan approval when you’re self-employed.

  • Raise your credit score. A better credit score increases your chances of loan approval. Always making on-time payments and paying down existing debt are two ways to boost your score.
  • Don’t take on any new debt. If you want to qualify for a personal loan, now is not the time to buy a car, apply for a new credit card or otherwise get further into debt.
  • Get a cosigner. Asking someone to cosign the loan — who has a more traditional paycheck and excellent credit — may virtually guarantee loan approval.

Self-employed personal loan alternatives

Despite your best efforts, getting a personal loan doesn’t always work out. But you have other options to consider.

Cash advances for self-employed borrowers

For self-employed workers looking to borrow a relatively small amount of money — say, $500 or less — a cash advance app may be a good solution, as these have more flexible lending requirements. Cash advance providers typically don’t look at your credit history and don’t charge interest, although there may be some fees associated with the loan.

But keep in mind that some cash advance providers require direct deposit. Depending on how you get paid, you may also want to consider cash advance apps that don’t require direct deposit.

Credit cards for self-employed workers

If you don’t need cash in hand, you could apply for a credit card with a 0% introductory rate. For example, if you have a medical bill or need a new furnace, you could put it on a card that has no interest for up to 15 months — or sometimes more — and pay it off before the regular rate kicks in. Credit cards are typically easier to qualify for than a personal loan, but you may need a good credit score.

Home equity financing

Homeowners with equity might qualify for a home equity loan or a home equity line of credit (HELOC). These types of financing could be a good option if you need a larger sum, but you may run into some of the same stumbling blocks as personal loans. However, if you own the home with a spouse, you may be able to overcome those obstacles more easily and qualify for a loan using your home as collateral.

Payday loans for self-employed borrowers

Payday loans are short-term, no-credit-check loans that usually top out at $1,000 and may accept self-employed workers. The downside is that these loans are usually very expensive, with APRs in the triple digits, and they’re not available in all states. But, a payday loan may help out in an emergency if you think you can pay it back right away and avoid getting into a cycle of debt.

Secured loans

If you own a car, boat or other item of value, many personal loan lenders offer a secured loan option. Obtaining a loan secured with collateral can be easier to qualify for if your income is somewhat irregular because the loan is less risky for the lender. But if you can’t make your payments, you’ll lose your valuables, and your credit score will take a hit.

Frequently asked questions

Are there personal loans for self-employed borrowers with bad credit?

Bad credit is often a stumbling block if you need to get a personal loan, but it’s not impossible. You may want to consider a no credit check loan, although that could be a more expensive solution. Another option is to look into lenders that work with bad credit borrowers and consider other factors besides your credit score when determining loan approval.

Can I get a loan if I’m self-employed but only work part-time?

The number of hours you work is not as important as how much money you bring home. Many freelancers make a great living without putting in 40 hours a week. The main issue is proving you earn enough to repay your loan regardless of how many hours you work.

Can I get a personal loan if I’m self-employed but can’t prove my income?

Lenders want to know that you bring in enough money to make your payments. If you can’t prove your self-employment income, it can be very difficult to qualify for a loan — or one with reasonable rates. However, some lenders may consider other sources of income too. If you bring in enough money from child support, investment income, alimony, retirement income or government benefits, you may still qualify for a loan.

Megan B. Shepherd's headshot
To make sure you get accurate and helpful information, this guide has been edited by Megan B. Shepherd as part of our fact-checking process.
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Written by


Lacey Stark is a freelance personal finance writer for Finder, specializing in banking, loans, investing, estate planning, and more. She has 20 years of experience writing and editing for magazines, newspapers, and online publications. A word nerd from childhood, Lacey officially got her start reporting on live sporting events and moved on to cover topics such as construction, technology, and travel before finding her niche in personal finance. Originally from New England, she received her bachelor’s degree from the University of Denver and completed a postgraduate journalism program at Metropolitan State University also in Denver. She currently lives in Chicagoland with her dog Chunk and likes to read and play golf. See full bio

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2 Responses

    Default Gravatar
    VijaySeptember 25, 2018

    I want cash loan please contact me.

      Default Gravatar
      nikkiangcoSeptember 25, 2018

      Hi Vijay,

      Thanks for your message and for contacting finder.

      I’m afraid we’re not able to contact you. If you’d like to speak to a loan provider, choose from our list within the page that says “8 providers that accept self-employed applicants” and hit the GO TO SITE button. If you need to review the provider, select the MORE INFO link and it will direct you to a review page by finder.

      As a friendly reminder, be sure to check out the Product Disclosure Statement of the loan before applying and make sure your talk with the lender is clear enough and you’ve discussed all options available.

      Hope this was helpful. Don’t hesitate to message us back if you have more questions.


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