Personal Loans for Self-Employed Workers

Self-employed and wondering if you could get a personal loan? Explore your personal loan options with Savvy.

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, updated on July 4th, 2024       

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The features of self-employed personal loans

Compare rates and save

You can fix your interest rate across your loan term, enabling you to lock in an affordable rate at the beginning and guarantee it remains the same across your term.

Choose to repay over one to seven years

By selecting a period over which to repay your loan, you have a say in the affordability and cost of your personal loan by shaping the cost of each instalment.

Borrow up to $75,000

Personal loans are highly flexible in how they can be used, with amounts ranging from as little as $2,000 all the way up to $75,000, making them suitable for many purposes.

Get approved with your last two tax returns

Instead of utilising a payslip as part of your personal loan application, you can supply your lender with the two most recent years’ worth of tax returns.

Consolidate your outstanding debts

One of the many reasons you may wish to take out a personal loan is to cover outstanding loan debt, which will help you bring it under one single payment to make it more manageable.

Bad credit options available

Even if you have a bad credit score, whether that be through setting up your business or otherwise, there are bad credit personal loan options available to you.

Instant approval and rapid fund transfer

Your loan application can be approved in just 60 seconds after submission, with funds able to land in your account in as few as 24 hours thereafter.

Diverse accepted income

If you earn other income from part-time or casual employment, or receive benefits from Centrelink, we can help you compare flexible lenders who can work with your situation.

Types of personal loan

Why compare personal loans through Savvy?

Self employed personal loans explained

Is it more difficult to get a personal loan for self-employed people?​

It's not necessarily more difficult, but you'll face some different application requirements. Lenders may view personal loans for self-employed people as being high-risk if you've only been running your business for a relatively short period of time. Doing so means you don't necessarily have the luxury of a stable income in the same way as a pay as you go (PAYG) employee.

The main concern of a lender when assessing any finance application is that the borrower will make their repayments. As a self-employed person, you need to find appropriate documentation to demonstrate that is possible. You can’t just show your regular payslips from your employer as employees can.

What documentation do you need to apply for a personal loan for self-employed people?

You need to provide as much evidence of your income and your ability to repay the loan as possible. This should include your most recent:

  • tax returns
  • financial statements for your business

Providing this information for the past two or three financial years will help the lender assess your application. Depending on their lending policy, lenders may take an average of the income you’ve earned over that period. They may even take a conservative approach and use the lowest figure.

Your business financial statements should include your income statement, balance sheet and business activity statements (BAS). Ideally, these statements should have been prepared by an accountant.

Are ‘low doc’ or ‘no doc’ options available as personal loans for self-employed people?

Some lenders may accept ‘low doc’ or ‘no doc’ personal loan for self-employed applications. ‘Low doc’ is an abbreviation for ‘low documentation’. ‘No doc’ is an abbreviation for ‘no documentation’.

If you apply for one of these loans, you’ll usually have to sign a declaration of the income statement. You do this instead of providing the standard documentation typically required. You may also need to supply:

  • an accountant’s letter,
  • your ABN number,
  • your GST registration, and
  • any BAS that you can.

However, you should only apply for this type of finance if you can’t provide the standard documentation. ‘Low doc’ and ‘no-doc’ finance has higher interest rates than standard personal loans for self-employed people.

The table below compares ‘low doc’ and ‘full doc’ loan interest on a $25,000 debt over seven years. ‘Low doc’ finance usually has a loading of 3% or more to compensate the lender for the increased risk.

Type of loan Interest rate Total interest payable
Low doc
Full doc

Is a secured personal loan for self-employed people an option?

Yes – and applying for one will improve your chances of being approved. It will also help you to get finance on better terms and conditions because it lowers the lender’s risk.

secured loan requires you to offer an asset as collateral security to the lender. For example, your vehicle on a car loan. If you don’t make your repayments, the lender can legally repossess your car. They can then sell it to recover your debt.

An unsecured loan is your other option. It doesn’t require you to put up an asset as collateral security. However, it’s important to understand that unsecured finance interest rates are higher. This compensates the lender for the increased risk.

What’s the difference between a personal loan and business loan?

Business owners may also look to unsecured business loans when it comes to obtaining finance. These work in a similar way to personal loans but hold several key differences. Borrowing ranges are far greater for these loans, with amounts ranging up to $300,000, but their usage is limited to business purposes only. This stands in contrast to a personal loan, which can be used for both business and personal purposes. If you’re only looking for a smaller loan amount and have a strong personal credit score to fall back on, though, you might find that a personal loan is the best option for you.

Can I use a business overdraft instead?

You can – a business overdraft on your account is another finance option that sole traders may look to take advantage of. These essentially function as a personal loan attached to your bank account but allow you to withdraw money beyond $0 up to a pre-approved limit whenever you like. You’ll only pay interest on the amount you withdraw and won’t have any set repayment schedule. However, these often come with higher interest rates than loans, so they may be more suitable for smaller amounts you can quickly access and repay.

Can a guarantor help my application if I’m starting up a business?

Yes – guarantors guarantee the repayment of a loan on your behalf, meaning they’ll be required to pay it if you aren’t able to do so. This is particularly useful if you’re starting your own business, which is seen as risky in terms of your ability to consistently repay a loan, as your guarantor will instil more confidence in your lender.

Ways to maximise your personal loan borrowing power

Common self-employed personal loan questions

How much can I borrow for a personal loan?

The amount you can borrow depends on your lender’s lending criteria and how much you can afford to repay. However, most lenders have minimum personal loan amounts of $5,000 and a maximum of $75,000.

Use our repayment calculator to find out your repayments for different loan amounts, interest rates, terms and repayment schedules.

What is a comparison interest rate?

A comparison rate includes both the interest rate on your finance and the cost of any associated fees and charges. Lenders in Australia are legally required to tell you the comparison rate before you enter into any finance agreement.

Can I get a personal loan if I’m self-employed and have a bad credit score?

Yes, it’s possible to get a bad credit loan, but your chances of having your application declined are also higher. If you are approved, you will have stricter finance terms and conditions. For example, you will usually be charged a higher interest rate and/or be asked to provide a guarantor.

Should I get a shorter or longer personal loan term?

That depends on your needs and financial situation. Personal finance terms usually range from one to seven years. Longer terms will have lower repayments for the same loan amount at the same interest rate than shorter terms will. But you’ll also pay more interest with a longer term.

How can I be sure I can afford my repayments?

If you have a fluctuating income running your own business, make sure you eliminate or reduce any non-essential expenses. If there are weeks when you earn more, use your extra funds to make additional repayments. This will allow you to get ahead. Some lenders will then allow you to make lower repayments in the months where your cash flow isn’t as high.

Helpful personal loan guides

Still looking for the right personal loan?

Personal loans come in all shapes and sizes, so read more about the ways you can use them, as well as how they might work for you.