Loan Alternatives for the Self-Employed

When a person takes a loan, the usual documents he must present are his proof of in, income tax return, employment certificate, and bank statement. Lenders would want to assess his capacity to pay the monthly dues along with interest. Extending a loan to someone who has no regular income can be a risk.

So, does this mean that the self-employed cannot get a loan from banks and other financing companies? The answer is “no.” A person that works for himself earns an income by practicing their profession or trade or in other occupations.

The whole process can be challenging, but there are many ways that someone who has no employer can get approval for a loan. Here are some of the credits for the self-employed.

Types of Loans for the Self-

Several lenders welcome self-employed applicants for payoff loans, SoFi, and Upgrade. Payoff loans offer consolidation of all debts from several credit cards so that you will enjoy a fixed monthly payment. The lender will ask you to submit your tax return and Schedule C, a tax form where you indicate your income and profits, to assess your earnings and capacity to pay.

You also have to submit a bank statement as well as a bank account where you deposit your earnings. The creditors will release up to $35,000 to pay off all your credit card balances. Paying one creditor is better than worrying about multiple dues every month.

Another loan that self-employed people can enjoy is the SoFi loan. With a maximum loan offer of 100,000, which the company will release on several installments, you can use the funds to pay for the consolidation of your debts, house improvement, hospitalization, and relocating.

To qualify, you must show your credit score, your education, expenses, and income to make sure that you can pay the amount you borrowed on time. Having a co-signer can increase your chances of getting loan approval. A co-signer is a person that would pay for the loan if ever the borrower fails.

If you want to take an unsecured personal loan to buy appliances, pay for medical bills, or pay old debts, Upgrade online lending offers up to $50,000 to self-employed borrowers. To apply, have a copy of your tax return and your Schedule C. You may also need transcripts from the IRS as well as a bank statement or statements in the last 40 days.

Other Personal Loan Options

Self-employed borrowers can explore other options aside from using the services of online lenders. Here are different ways to borrow money for your needs.

  • Pawnshops

Do you own jewelry and expensive gadgets? Nowadays, some pawnshops would accept high-end mobile phones, cameras, and branded accessories such as bags and sunglasses. Pawnshops do not ask questions or require any documents. You can ask for an assessment of your property, how much they would lend you for the item, and if you agree to the loan price, you can sign a receipt and take home the money.

A customer that cannot pay back the loan on the maturity date of the credit must pay interest and penalties. The shop will give a grace period of three months after the maturity date. Items used as security for the loan become the property of the lender, and he can sell them to cover for the amount that you borrow.

  • Home Equity Loan

Self-employed people that own real property can apply for a home equity loan. For this type of loan, you borrow against the value of your home when taxes, credit balances, and other payables due.

A person must have 20% equity on his home before he can use it to secure a loan. A house that costs $300,000 will require you to pay at least $60,000 to earn 20% equity. You can only borrow against it if your capital is around 30% or more. You might also have at least a credit score of 620, recent tax reforms, and a record of your income.

  • Credit Cards

Another way that you can get a loan if you are self-employed is through a credit card. Anyone that is of legal age and has an income can apply for a credit card. You can use it to purchase items or to get a cash advance in which you withdraw from an ATM using the credit card. However, interest for cash advances is higher than using it to purchase goods.

Making prompt credit card payments can improve your credit score, which will later allow you to take loans from banks and other lending companies.

You may also seek help from your family and friends. If they can lend you money, you can save on interest. Some of them might only ask you to return the money when you can. You can enjoy the most flexible payment term as well.

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