Compare personal loans for the self-employed

When you're self-employed, getting a personal loan can be tricky. We can help guide you to your ideal loan for your professional life.

Last updated:

Freelance photographer at home working on laptop

In these cautious times, banks are increasingly wary of lending to anyone without a solid financial track record, and that applies especially if they are self-employed. But as the number of self-employed people rises lenders realise that there is an expanding market which needs to be served. So although it may be harder to get a personal loan if you’re self-employed, it isn’t impossible.

Read our guide to find out more about your options, how to go about applying for a loan, and what documents you’re likely to need to support your application.

Post Office Money® Personal Loan

Fast, flexible loans from Post Office Money

  • Borrow from £1,000 to £25,000
  • Instant decision in most cases
  • Fixed rate and fixed monthly payments over the whole term
  • Applications from self-employed considered

Representative example: Borrow £15,001.00 over 3 years at a rate of 3.1% p.a. (fixed). Representative APR 3.1% and total payable £15,718.32 in monthly repayments of £436.62.

Promoted

warning icon Warning: late repayments can cause you serious money problems. See our debt help guides.

There are plenty of lenders out there who will consider applications from self-employed individuals. Here are some examples with lending criteria:

Name Product Eligibility requirements Documentation required
  • You do not have any CCJs
  • You regularly get paid at least £800.00 per month
  • You have been living in the UK for at least 3 years
  • Address details for last three years
  • Tax returns (2 years' SA302 calculations)
  • Bank statements corroborating income declared.
  • Bank account details
Representative example: Borrow £7,500 over 3 years at a rate of 18.0% p.a. (fixed) with total fees of £440. Representative APR 22.9% and total payable £10,144.52 in monthly repayments of £281.79.
  • Aged between 21 and 70
  • UK resident for at least 3 years with a UK bank or building society account
  • Annual income of at least £12,000
  • Previously been employed for a minimum of two years
  • Good credit rating with no history of CCJ's or bankruptcy
  • Address details for last three years
  • Proof of annual income (e.g. tax return)
  • Bank account details
Representative example: Borrow £15,001.00 over 3 years at a rate of 3.1% p.a. (fixed). Representative APR 3.1% and total payable £15,718.32 in monthly repayments of £436.62.
  • Aged between 21 and 75
  • UK resident for at least 3 years with a UK bank or building society account
  • Minimum annual income
  • Visible credit history with a good track record of repaying debt e.g. utility bills
  • Address details for last three years
  • Employment details
  • Proof of annual income (e.g. tax return)
  • Bank account details
Representative example: Borrow £10,000 over 5 years with representative APR 12.9% (fixed) and total payable £13,405.80 in monthly repayments of £223.43.
  • Aged between 21 and 70
  • UK resident for at least 3 years with a UK bank or building society account
  • Annual income of at least £12,000
  • Previously been employed for a minimum of two years
  • A good credit rating with no history of CCJ's or bankruptcy
  • Address details for last three years
  • Employment details
  • Proof of annual income (e.g. tax return)
  • Bank account details
Representative example: Borrow £10,000.00 over 3 years at a rate of 3.1% p.a. (fixed). Representative APR 3.1% and total payable £10,478.16 in monthly repayments of £291.06.

Compare up to 4 providers

How can I get a personal loan if I’m self-employed?

If you’re self-employed and looking for a personal loan, you might feel daunted by eligibility requirements. But there’s a good chance you already have the evidence of income that you need, in the form of tax returns, accounts or bank statements. It’s also possible to get a quick decision, with some lenders able to process and approve your application in less than 48 hours. You’ll improve your chances of making a successful application if you know what your options are, how the application process works and what documents you’ll need as evidence to support your application.

You’ll be glad to know that you do have options! Several mainstream lenders are willing to lend to self-employed individuals, provided you meet their requirements for affordability and can show supporting documentation. In addition, there are a number of specialist lenders who have focused their efforts on more niche areas of the market, such as the self-employed. Finally there are alternative types of credit which could meet your requirements, such as a guarantor loan, credit-builder loan or certain types of credit card. Learn more about alternatives.

Will it cost me more because I’m self-employed?

Not necessarily – especially if you meet a lender’s criteria for having the supporting evidence and documentation needed for a standard personal loan, and you have financial records dating back for at least three years.

Remember that as competition has grown, as a self-employed applicant, you may find loans which are no more expensive than a standard bank loan. Just be sure to compare all the options available to you, and the features of and conditions applying to your chosen product before you sign up with a particular lender. The APR that a lender offers you may differ from its advertised “Representative APR”, and will be based on factors such as you credit score, income and expenditure.

What is APR?

If you’re comparing any credit-based products, it won’t be long before you’ll come across the Annual Percentage Rate (APR).

This figure is designed to provide an annual summary of the cost of a loan and takes into account both interest and any mandatory charges to be paid (for example an arrangement fee) over the duration of a loan.

All lenders must calculate the APR of their products in the same way, and must tell you the APR before you sign an agreement, so for consumers it can be a handy tool for comparison.

Bear in mind, however, that lenders are only obliged to award this rate to 51% of those who take out the loan – the other 49% could pay more. That’s why it’s often referred to as the representative APR.

You should really take this into account when applying for a loan as a self-employed. While in many cases you could still be able to get the advertised rate, you may be offered a higher one if your circumstances paint you like a more high-risk borrower.

Are there alternatives?

In short, yes, however each comes with its own considerations and whether or not it is a smart choice will depend on your individual circumstances.

With a guarantor loan, a third party (typically a partner or family member) commits to paying the loan off in the event that you default on repayments. With a credit builder loan or stepping stone loan, you’ll start with a small amount of credit for a short period and build up your credit limit from there. In both cases, the interest rates you’ll pay may not be the most competitive.

If the loan is to fund the purchase of business equipment or materials (but not stock), you could use asset finance or invoice finance, whereby a lender will loan you money against the value of goods used for your business which you own, such as buildings, vehicles, machinery or office equipment, or will advance a loan against the money which is owed to your business and which has been detailed on outstanding invoices. Asset financing and invoice financing, however, are both likely to be more expensive than a regular personal loan.

Depending on your credit rating and the purpose of the loan, there may be a suitable credit card for your needs.

With a 0% purchase credit card you could make purchases and pay no interest for a set period which could be as long as 31 months, although expect to pay hefty fees to draw down cash. With a 0% money transfer credit card you could transfer funds from the card to another account and again pay no interest for a set period. With a credit builder credit card, you start with a low credit limit but this can be reviewed in as little as four months. In these instances you need to set, and always stick to, a repayment schedule to make sure that you repay the money before the low rate period ends. If you don’t, you could find yourself paying a hefty amount of interest over a prolonged period. You should also weigh up any regular or one-off fees associated with the cards.

There is also a small number of innovative new lenders such as Tappily, that offer alternative takes on shorter-term borrowing, for borrowers that striggle to get approved by more mainstream lenders. Tappily was primarily designed to help people avoid expensive unauthorised overdraft fees.

Tappily

Tappily line of credit up to £2,500 as and when you need it

  • Tappily uses read-only access to your current account to provide a flexible line of credit.
  • Avoid unauthorised overdraft fees by setting account balance triggers.
  • Once approved, transfer money into your account within 15 minutes.

Representative example: Borrow £1,200 for up to 75 days at a rate of 124% p.a. (variable). Representative APR 49.7%.

Promoted

What documentation do I need?

Your would-be lender will usually need to see some or all of the following:

  • Tax returns (SA302). Once you’ve submitted tax returns, you can simply log into your HMRC online account and download your SA302 calculation. You should be able to produce copies of your SA302 calculation for at least the last two years to help prove the income that you declare as part of your application.
  • Bank statements. These are likely to be requested so that the lender can corroborate the earnings shown in your SA302 calculation, and get a picture of your overall financial position (regular income and pattern of outgoings).
  • Confirmation of three years’ addresses. This is usually acceptable in the form of bank statements, or council tax or utility bills
  • Proof of any rental income. This should be declared and evidence provided, again through your bank statements or mortgage documents and statements, and you may need to produce any lease/tenancy agreements.
  • Details of any shareholdings and dividend payments.
  • Company/business information. Such as the status of the business (sole trader, partnership, limited company, etc), and details of anyone other than yourself with a financial interest in the business.

FAQs

We exist to help you find better. The offers we've compared on this page are from a range of products whose details we can track; we don't cover every product on the market...yet. Unless we've indicated otherwise, products are shown in no particular order or ranking. The terms "best", "top", "cheap" (and variations of these) aren't product ratings, although we always explain what's great about a product when we highlight it; this is subject to our terms of use. When you make major financial decisions, it's wise to consider getting independent financial advice. Always consider your own financial circumstances when you compare products so you get what's right for you.

Was this content helpful to you? No  Yes

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.

2 Responses

  1. Default Gravatar
    PatNovember 11, 2018

    As a self employed person who let hi house for £625 pcm is it reasonable to ask to borrow approximately £13,000 over 7 years to replace wooden window and soffit/fascia in the rental property. LTV is approximately 50%. My income is circa £30000 pa including rental yield.

    • Avatarfinder Customer Care
      JoshuaNovember 25, 2018Staff

      Hi Pat,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      Basing on the numbers you gave, there’s a chance for you to get a personal loan. What you can do is directly get in touch with any of the lenders on this page. Click on the “Go to site” green button to be redirected to their website. From there, you can then check your eligibility and know their requirements.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!

      Cheers,
      Joshua

Go to site