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How to Get a Personal Loan if You’re Self-Employed…

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Point of Interest

Self-employed workers and people in the gig economy have the same access to personal loans that traditional W2 employees do, but with a few caveats.

Often, self-employed workers want to know if they qualify for personal loans. Without a W2, like traditional workers, you may be wondering if a loan without income proof is possible. As the self-employed market and gig economy continue to grow, lenders have grown to adapt to accommodate prospective borrowers that work for themselves. If you’ve got a need for some quick cash, you’ve got options.  

Can I get a personal loan if I’m self-employed?

Yes, you can get a personal loan if you are self-employed. Where people may get confused is during the income-verification process. Most lenders require borrowers to show that they have a source of income they can use to repay the personal loan over time. For traditional workers, this may be as easy as sending in a copy of a W2 or a recent tax return.

While you won’t have a W2 as a self-employed worker, you still have plenty of ways to verify income. You can use tax returns, bank statements, PayPal ledgers or any other documentation to verify your income. Self-employed workers have the same abilities to take out a personal loan as traditionally employed workers do.

How to get a personal loan when you’re self-employed

1. Gather your income verification documents.

Most lenders will require you to show that you have an active source of income. Start by gathering documents that show your income over the past few months. Include things like bank statements, PayPal and e-commerce ledgers, tax returns, receipts and any other documents that show you have money coming in. The exact documents required will vary by the lender you choose and the nature of your business or work.

2. Determine the amount you need to borrow and what it is for.

Personal loan lenders are quite flexible in the uses that will be approved for a personal loan. That being said, you will need to let them know why you are taking out the money and how much you want to borrow. Having this decided prior to reaching out will help to expedite the process. Additionally, it can protect you from taking out more money than you need and digging an unnecessary financial hole.

3. Shop potential personal loan lenders that meet your criteria.

Compare different lenders that you meet the eligibility requirements for and that meet the needs you’re looking to handle. For your eligibility, look for credit score requirements, income minimums and any financial events that may or may not be allowed (defaults, bankruptcies, etc.). For the lender, look to see if the company will offer you the amount you need, approve the reason you want to borrow, has the repayment terms that work for you and can get you your funds in the time frame you need them.

Remember, banks are not the only places that offer personal loans. You can check credit unions and online lenders as well to find the most favorable terms to meet your needs. We have also reviews the best personal loans if you’re interested in shopping.

4. Complete the pre-approval processes.

Once you’ve zeroed in on a few potential lenders, complete the pre-approval process. While the rate you receive is not an official approval, it will let you know what is likely to happen if you complete the full application process.

Most lenders, including brick and mortar financial institutions, have online portals where you can complete the pre-approval process in just a few minutes. With some basic information, you’ll know if you’re likely to get full approval, the amount you’re likely to be approved for and the interest rate and fees you are likely to qualify for.

For people worried about their credit scores from a credit pull, the pre-approval process almost always only uses soft credit pulls, which have no effect on your credit score. You will undergo a hard credit pull during the final approval process, but that is standard across the industry with all lenders. Even then, those effects will be temporary. Also, there are always bad credit loans available for those worried about their credit scores getting approved.

5. Complete the final approval process.

After you’ve been pre-approved by a lender you want to work with, it’s time to complete the final application. This will be a lengthier process, but most lenders have streamlined the forms. Make sure you have a way to upload your income verification documents and signed loan documents once you are fully approved. Many personal loan lenders are able to get borrowers their money on the same day or the next business day as long as the company receives all the necessary paperwork by a certain time.

6. Ensure you have a plan for repayment.

The last step of the process for getting a personal loan when you’re self-employed is making sure you have a plan to repay the loan. The worst thing you can do is miss payments, make late payments or completely default on the loan. Take some time and ensure you have a plan to make good on your agreements and continue on-time payments throughout the life of the loan. If you don’t have a plan, don’t take out the loan.

Alternatives to a personal loan

  • Credit cards: You may be able to get access to funds by applying for a credit card. The pro of using a credit card is the borrowed money is revolving, meaning you can use it over and over again without requesting more money if you have more needs for cash in the future. Depending on the credit card you choose, the APR rate may be higher, comparable or lower than a personal loan.
  • Payday Alternative Loans (PALS): In an emergency, you may be considering a payday loan. Unfortunately, traditional payday loans are predatory and do not always have the borrower’s best interests at heart. In response, the government teamed up with credit unions to offer a payday loan alternative that offers the same fast cash benefits without the predatory characteristics.
  • Friends and family: While it may not be an option for everyone, some people may be able to ask a friend or family member for help when financial needs arise. This may put relationships at risk if things don’t go according to plans, but it may be a better option, depending on the specific circumstances.



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