Personal Loans for Self Employed Applicants
Gaining access to financing can be difficult for self employed individuals. Many financial institutions require proof of income or employment to ensure the applicant can pay back the loan. Self employed individuals may not have proof of income due to fluctuating earnings and other factors. Fortunately, there are lending options available to those with self employment income.
Generally, the requirements for loan approval will depend on the lender’s eligibility criteria and the applicant’s credit score. The following items may need to be provided to the lender when applying for a loan:
- Proof of self employment income including income tax returns and documentation of other forms of paid income.
- Proof of Assets including bank statements, credit card statements and other financial documents.
- Credit report to evaluate credit history and score.
- Legal documents such as incorporation papers, business licenses and partnerships.
Types of Loans
There are different types of personal loans available to self employed individuals. The most common types of loans include:
- Secured loans which use an asset as collateral for the loan and are typically backed by a bank or other financial institution.
- Signature loans which are unsecured and require the borrower to provide a signature as a guarantee of repayment.
- Business loans for self employed entrepreneurs who need additional working capital.
- Credit cards which are available from a variety of banks and can be used for daily purchases and to build credit.
Secured loans typically have lower interest rates than signature loans and business loans. Additionally, credit cards typically have variable interest rates and fees that can be lower than a loan.
Getting a personal loan as a self employed individual can be possible with the right documentation, research and a good credit score. Applying for a loan can be a complicated process and require a great deal of paperwork and information. With the right financially savvy steps, self employed individuals can get access to the financing they need.