A self-employed personal loan is a personal loan for people who are sole-traders or run their own business. While the application process is a bit different for self-employed personal loans, there are still plenty of options available to people who are self-employed. Typical options available to self-employed people include the following:
If you have a long-established business with a steady cashflow, or have been a sole trader or independent contractor for years, your chances of approval are better. Borrowers who have just set up a business will struggle to prove they can repay the loan.
As a self-employed borrower you also need to make sure you meet the lending criteria for the personal loan you're applying for.
Don't apply for a loan if the lender requires evidence you can't provide.
Low doc loans can be a useful resource for self-employed people who may not be approved for a standard personal loan. They require less documentation than traditional loans, which means a quicker and easier application process. So, if you struggle to prove your income or assets, you may find it easier to be approved for one of these loans.
Low doc loans have higher rates and fees than standard loans, especially if you're dealing with a specialist lender. So, you don’t want to apply for one unless it’s your only option.
As mentioned earlier, low doc loans are usually more expensive than standard personal loans. This means that you should try to qualify for a standard personal loan before you look for a low doc loan.
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Keep in mind that many banks and alternative lenders may offer loans that aren’t more expensive than standard loans to self-employed individuals. Make sure you’re comparing all options and that you’re aware of exactly what’s out there before deciding to apply with any particular lender.
Keep in mind the following factors when comparing the loans offered by different lenders:
| Interest rate | Make sure you know the difference between a fixed and variable interest rate. If you're going with a variable interest rate, check that you will be able to make monthly repayments if the rate happens to spike upwards at any time. |
| Turnaround time | Depending on why you're applying for the loan, you may need your money disbursed within a certain timeframe. |
| Eligibility | Before applying for any loan, check what the eligibility requirements are. Also, avoid applying for too many loans within a short period of time. Lenders consider you an high-risk borrower if you make frequent applications. |
| Loan cost | Make sure you're aware of all fees associated with each loan. This includes any one-off or ongoing fees. |
| Secured vs unsecured | 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 business equity. |
There are a number of reasons why your personal loan application may be rejected.
If you don't quite meet the criteria for a personal loan, applying with a guarantor can help get your application over the line.
Not sure how much you can borrow based on your income? If you're looking for a personal loan, find out how lenders determine how much you can borrow and how to see if you're eligible based on your income.
Just started a new job but need money straight away? You can apply for a personal loan with selected lenders now.
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I need a loans required for business growth and development. Can I help you.
Hi Rupesh,
Thanks for your enquiry.
Regarding your concern, please check our our list of business loans that could help you grow your business. Aside from a list of business loans you can compare, the page also discusses the things you need to consider before applying for a loan.
Please read through that page to make a better decision.
I hope this helps.
Cheers,
Danielle