How can I get a personal loan if I’m self-employed?
You can apply for any standard personal loan as long as you can meet the eligibility requirements. If you can’t meet the requirements, you can also apply for a cosigner loan, which allows you to apply with another person who may have stronger qualifications.
Depending on your lender, you may be required to put up collateral as security for your loan.
What documentation do I need to provide?
First, review the eligibility criteria of the lender to make sure that you’ll be able to provide the documents and show proof of a regular income — this is very important. Lenders usually require any or all of the following documents:
- Tax returns. Be prepared to show the last two years of your full personal and company tax returns. These will help prove any income you declare on your application.
- Financial statements. These may include any profit and loss statements to also support the income you declare.
- Proof of rental income. If you have any income from rental properties, you can declare this with real estate statements or copies of your executed lease agreements.
- Recent bank statements. This includes statements showing your savings and business transactions. It may also include statements showing any other outstanding loans or credit cards you have with other lenders.
- Company-specific information. If you own your own business, be prepared to provide information such as your company’s EIN, address, etc.
- Personal identification. Depending on the lender, this may be your driver’s license, passport or state ID. You’ll either need to copy your ID and fax it over to the lender or scan it and attach the digital file to your application.
Are loans for self-employed people more expensive that other personal loans?
Not necessarily. The rates and terms your ultimately offered will depend on the lender you apply with, their underwriting criteria and your qualifications including credit score, income and debt-to-income ratio (DTI).
Lenders may view your application as more risky if your income fluctuates a lot and in turn offer you a loan at a higher interest rate to mitigate that risk. Keep in mind that if you don’t qualify on your own, you could apply for a cosigner loan with someone who’s willing to be responsible for the loan should you be unable to make payments. Use our calculator to estimate how much you can afford to borrow based on your annual income.
How can I compare my options?
The following factors can be weighed when comparing the loans offered by different lenders to find the best deal for you:
- Interest rate. Make sure you know the difference between interest rates — both fixed and variable. If you’re going with a variable interest rate, check that you will be able to make monthly repayments if the rate happens to go up at any time.
- Turnaround time. Depending on why you’re applying for the loan, you may need your money disbursed within a certain timeframe. Make sure that any lender you choose is able to provide your money within the time period you need.
- Eligibility. Before applying for any loan, check what the eligibility requirements are. Also, avoid applying for too many loans, as lenders will often consider you an irresponsible high-risk borrower if you make frequent applications.
- Application process. When comparing different lenders, be aware of the application process specific to each lender and what kinds of challenges or difficulties you may face when applying.
- Loan cost. Make sure you’re aware of all fees associated with each loan. This includes any one-time or ongoing fees.
- Collateral required. Always check to see if the loan you’re considering is secured or unsecured. In other words, check whether the lender requires you to put up any collateral as security for the loan. Security could include assets such as your home or car.
Frequently asked questions
What if I’m set up as a sole proprietor?
You might find that you also qualify for some business loans as sole proprietor, but you can still apply for a loan.
How can I get a personal loan without proof of income?
as long as you have money coming in. Remember, income can come from sources other than employment — some lenders accept government benefits, pensions and retiree benefits and any other regular money you have coming in as income.
How can I get a personal loan if I work part-time?
Similar to self-employed borrowers, your options might be limited — and you’ll have to submit documentation proving that you regularly bring in enough money to afford your repayments. Check out our guide to loans for people working part-time to learn more about what’s available to you.
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