Need to get a loan? You’re not alone. There are about 21.1 million outstanding personal loan balances in the U.S. People take out personal loans to pay for everything from medical emergencies to car repairs.
However, your situation is tricky. Lending companies typically want to see proof of employment when evaluating you for a loan. But you don’t work for a company, you work for yourself.
This has you asking the question “can you get loans while self-employed?” Let’s find out.
How To Qualify
It isn’t as difficult as you might think to learn how to get loans while self employed. Lenders look at a variety of factors when determining your eligibility for a loan. While proof of employment is one of them, it’s not the gold standard.
Proof of Income
As a self-employed individual, you should be able to show proof of income. Your income might vary a bit more than a salaried individual, but you likely have something coming in regularly that you can show. You can use bank statements, tax returns, your schedule C and schedule SE, and your 1099-MISC form to show your average monthly income.
Credit Score
Another important piece of the puzzle is your credit score. However, don’t worry if your score isn’t as high as you’d like. While a good score can mean that you qualify for a better rate, a bad score doesn’t necessarily mean that you won’t qualify for the loan.
So if you’re self-employed and need a loan, don’t worry. In most cases, as long as you’ve got proof of income and a halfway decent credit score, you’re good to go!
But, what if you’re still having trouble? We have a couple of more suggestions.
Collateral
If you have something valuable enough to cover the loan, perhaps a car or a certificate of deposit, you can use it as collateral.
Since this lowers the lender’s risk, it becomes easier for you to qualify.
Cosigner
Another option is to add a cosigner to the loan. This is, in effect, “borrowing” another person’s credit score. You sign the loan with a gracious friend or family member who has an excellent credit score and you can use their information to help you qualify.
Just be sure to pay back the loan on time because many great relationships have been ruined over money.
So, Can You Get Loans While Self-Employed? Yep!
There you have it, getting self-employed loans isn’t as difficult as you might have thought. All you need is the right paperwork and you can make it happen.
So, stop asking yourself “can you get loans while self-employed” and start applying for your loan.
Looking for more great financial or business advice? Check out other articles on our blog today!
