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Compare personal loans for the self-employed

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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.

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.

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
  • Your rate will depend on the amount, term and your personal circumstances.

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.

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4 popular lenders that accept self-employed applicants

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 £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.

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.

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 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%.

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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

*Disclaimer: The offers compared on this page are chosen from a range of products finder has access to track details from and is not representative of all the products available in the market. Unless indicated otherwise, products are displayed in no particular order or ranking. The use of terms "Best", "Top", "Cheap" including variations, are not product ratings and are subject to our terms of use. You should consider seeking independent financial advice and consider your personal financial circumstances when comparing products.

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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

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