Being your own boss and having flexible hours can be some of the perks that come with being self employed. There are a lot of expenses that come with being self employed that cannot be buffered without a steady salary. When these unexpected expenses pop up it will be best to know what your options are. This is a handy guide on knowing how to get a personal loan when you are self employed.
Can I get access to a personal loan?
It is possible for people who work for themselves to get access to a personal loan from both traditional and non-traditional lenders. However, it could be a bit tricky when it comes to the eligibility criteria, especially if you do not have the required documents to prove that you are financially stable to take out a loan.
What will I need to apply?
To smoothen the process of applying for a personal loan you will need to know the eligibility criteria and the necessary documents that are needed to apply. Most lenders will require that you have the following documents on hand when applying:
- Proof of personal identification which can be the form of your passport, ID, or driver’s license.
- Proof of income which can be in the form of statements which are aligned to your business i.e. profit and loss statements.
- You will need to provide two years of your personal and company tax returns.
- Information relating to the company such as the company’s EIN, address and more
- Bank statements will be needed as proof for any business transactions, your savings, outstanding loans etc.
It is advisable that you check your credit report to check for any errors or arrears to avoid having your application rejected too many times in a short space of time, which can affect your credit score.
How can I compare my options?
There are many personal loans that are available on the market for self employed individuals, but to ensure that you are getting the best deal possible you will need to compare your options. Checking the interest rate and calculating how much it will cost you over the term of the loan is essential, but also looking at the comparison rate will help you get a more accurate cost of the loan as it covers the fees and charges that come with it. Always keep in mind to compare before putting your signature on the dotted line.
How can I better my chances of being approved?
Your chances of being approved for a loan usually just requires that you check the eligibility criteria. However, if you do want to increase your chances and have your application approved on the first attempt here are a few things that you can do:
- Check your credit score. Your chances will improve if you have a good credit score. If it is not good, then you can consider building your credit score until you are able to apply.
- Check your credit report. If there are any errors or outstanding credit card and loan debt it is best to have this sorted out. It will help you avoid getting into a debt spiral.
- Consider getting a co-signer. If you need the loan but do not have a credit score that is strong enough you can get someone with a good credit score to co-sign with you.