Everything You Need to Know
What are Self Employed Loans?
Self-employed loans are flexible personal loans that can be used to help finance a business or to aid your personal financial ambitions. Self employed loans can be unsecured or secured against an asset, which means they are accessible for people with good and bad credit.
Can you get a loan if self employed?
Yes, you can get a personal loan if you are self employed. Lenders offer a variety of loans to freelancers and self employed people who need the extra financing. They offer loans which are both suited to people with a good and bad credit history.
Types of loans you can apply for if you are self employed
• Unsecured loans
Unsecured loans are based on your credit score and require no collateral. They are common and require you to pay off your loan via fixed monthly instalments, as well as any interest that is accrued.
• Secured loans
Secured loans are loans that are secured to a valuable asset such as a home, known as collateral. Therefore, if you default on a loan you will lose your property to the lender. These loans are used by people who have bad credit and struggle to get an unsecured loan.
• Guarantor Loans
Guarantor loans are useful loans for the self employed with bad credit, but don’t want to risk losing their home. The guarantor co-signs the loan, so if the borrower fails to pay their monthly loan payment or defaults on the loan, the guarantor is responsible for carrying on the payment.
What makes these loans different from other personal loans?
If you are self-employed, then you may have already found it difficult to apply for a loan due to the dependability of your income. Here at iThink Finance, we understand how important it is to feel unrestricted and have the financial freedom to live up to your financial ambitions.
The main difference between personal loans for self-employed and regular personal loans is that lenders who offer loans to those who are self-employed are that these lenders have different lending criteria. This allows lenders to account for those freelancers and business owners who may not have a conventional salary.
Why is it so difficult to get finance if you’re self-employed?
It can often be difficult for freelancers and business owners to apply for loans, as many lenders require applications from employed people who can provide clear evidence of a steady and regular income. This allows lenders to make the necessary assessments on an applicants affordability and their financial position, to determine whether they can be relied upon to make the repayments.
However, if you are self-employed, it may be challenging to show that you have a secure regular income, as your salary may come from multiple different sources, proving difficult to quantify to some lenders. However, this is not the case for all lenders, and here at iThink Finance, we are happy to accommodate our customers’ needs and help you to find the best deal on your personal loan, regardless of your current employment situation.
How do self employed loans work?
Self employed loans work by agreeing with a lender on how much money you wish to borrow. You will then receive the agreed amount of money directly into your account. You are then required to repay the loan and any interest accrued in monthly instalments, for an agreed fixed period of time.
What does unsecured loan mean?
An unsecured personal loan lets you borrow money without having to offer collateral, such as a home, therefore is less risky in comparison to a secured loan. Unsecured loans are offered based on the creditworthiness of the borrower and the likelihood that they will repay the money they’ve borrowed.
Can you get self-employed loans that are unsecured?
Self-employed loans are available as both secured or unsecured loans. Unsecured loans are generally dependent on the borrower’s creditworthiness. This means that should a borrower have a poor credit score, they’re likely to receive a loan with high APR and a lower borrowing amount.
Nonetheless, self employed loans are available as unsecured loans by lenders.
Can you get a self employed loan with bad credit?
Yes, you can get self employed loans with bad credit. Lenders offer unsecured loans to people with bad credit, but will likely reduce the amount that can be borrowed and increase the APR. Secured and guarantor loans are often better suited for people with a poor credit history.
Can I get a loan if I work part time?
Yes, you can get a loan if you work part time. You may be required to earn over a certain amount of money and to provide proof of regular income. This helps ensure that you can make the monthly loan repayments on time, rather than defaulting on the loan.
Ultimately, each lender has different criteria that has to be matched before they lend money. Nonetheless, there are still lenders who offer loans to people who work part time.
What are the benefits of self employed loans?
There are many benefits to taking out a self-employed loan. Some apply for a personal loan as a form of support during times when business is slow. Other people apply for a personal loan to help reach a financial goal.
Benefits of self employed loans
- Different Lending Criteria - The benefit of self-employed loans is that lenders have slightly different lending criteria to those who offer standard personal loans. This means that lenders can account for those freelancers and business owners who may not have a conventional salary.
- Quick Money - Once you’re accepted by a lender for a loan, the money can be in your account within 24 hours - meaning you could be free to spend it on the same day.
- Flexibility - Personal loans for self employed workers are not as restricted as business loans. This means the borrower has much more freedom in what they can spend their loan on.
- Self Investment - A self employed loan can be used to invest back into your own business, such as buying new equipment or putting the money towards some transport such as a van.
- Personalised - You can decide on how much money you want to borrow and for how long you need to repay it. This means that you can personalise your loan to your situation.
How can I get a self employed loan?
You can get a self employed loan by going straight to a lender or a broker. You will have to apply over the phone or through a quick online application. If the application is successful, the lender will be in touch to discuss the loan further.
Once the loan and repayment details have been agreed with the lender, the money will be directly transferred into your account in 48 hours.
What do I need to apply for a self employed loan?
When you apply for a self employed loan you will be required to disclose some details in order to be considered by a lender. Generally, you will be asked to provide the following details.
Personal details: You will be required to provide personal details such as your full name, contact details (email and phone number), your date of birth, your current address and any previous addresses from the last 3-5 years.
Credit score and credit history: You will need to provide your credit score and credit history. This is an essential requirement to help determine how much money should be lended and how much APR should be charged on repayments.
Income and Employment Details: Lenders will often ask to see your income and employment details to determine whether or not the borrower can repay the loan. This helps protect both the lender and the borrower’s interests.
Expenses and Outgoings: Lenders will require your expenses and outgoings in order to confirm whether you can afford the loan repayments. This includes, rent, mortgage repayments, bills, debt, subscriptions. A lender will likely ask for you to disclose if you have any financial dependents for the same reason.
Supporting documents: Additional documentation may be required by some lenders for verification and security purposes. Most applications are completed online, but will require documentation at the assessment stage. Often, documentation can be submitted online in order not to slow the application process down.
How can I apply for a self employed loan?
If you are eligible for a self employed loan, the next stage is to apply for a loan using the online form. You can apply for personal loans for self-employed workers online by going to the application page. Next, you will need to follow the steps provided below to complete your application.
1. Choose your financing plan - Choose between £1000 to £20000 and your repayment plan ranging 12 - 24 months.
2. Fill in our online form - Our online form is designed to be simple, so you just need to fill in some basic details about yourself.
3. Get an instant decision - You should know whether you have been accepted or not by one of our lenders within a matter of seconds.
4. Receive your money - Once your application is accepted and processed by one of our panel of lenders, payment should be straight into your account in 24 hours.
What Can I Use Self Employed Loans For?
There are many different reasons as to why someone may take out one of these loans, the reasons for taking out an unsecured personal loan might be, but are not limited to the following reasons.
Home improvement or repairs
If you’ve come home from a hard day at work to find that your ceiling has sprung a leak, or that your kitchen is in desperate need of updating and refurbishing, a loan could cover the costs.
Large purchases or deposits
If you’re considering putting down the deposit on a new van for work, or maybe you need to invest in a new desktop to make your job easier, you could take out a self-employed loan to pay for the deposit.
Improving your business
Sole traders and business owners are continually looking at the newest innovations within the industry to make their businesses better. If you’re looking to take your business to the next level but don’t have the funds right now, then this type of loan could help.
If you’ve taken out credit in the past from multiple sources and are struggling to remember your repayment dates for each, or you’re just fed up of paying multiple rates of APR; then you could use your loan for debt consolidation.
Your big day could be something you’ve dreamt about since you were a child, so for most, you’ll want to ensure that your big day is a special one. A loan of this type could help you and your partner to have the wedding of your dreams.
Private medical bills
Whether you’ve just had to pay for emergency dental surgery, or whether you’re simply considering a cosmetic procedure, a medical loan of this sort could help you to pay for any outstanding medical bills.
Am I Eligible for a Self-Employed Loan?
As a broker, we work with responsible lenders who all have different eligibility requirements that need to be met for your application to be approved. However, the lenders we work with share a minimum criteria that needs to be met in order to be accepted in the first application stage.
Will I be Approved?
- You should be a UK resident
- You should be over the age of 18
- You should have an active UK bank account
- You should have a regular income
What about if I have bad credit?
If you’re worried about applying for a self-employed loan on account of your poor credit history, then don’t worry. All of the lenders we work with understand individual circumstances and will consider all applicants reasonably, irrespective of missed repayments or CCJ’s in the past.
However, it is worth taking into account that if you are approved by one of our lenders, if you do have poor credit, then the interest rate you receive may be less competitive.
Are There Any Alternatives? Why should I choose iThink Finance?
iThink Finance can help you to borrow unsecured personal loans of £100 up to £5,000 for periods of between 30 days to 2 years (1 month to 24 months). Apply with us today and receive an instant decision on a loan for self-employed workers.
iThink Finance is a credit broker, not a lender, and we specialise in helping our customers find the best, fastest and most flexible loan to suit their circumstances. We charge no fees and have no charges for the service that we provide.
What are the alternatives?
- Guarantor loans - if you’re struggling to find a lender who is willing to lend you money on account of you being self-employed, then you could get a co-signary and take out a guarantor loan.
- Secured loans - alternatively if you’re struggling to get unsecured finance, another option is for you to secure your loan against an asset such as your home or property.
- Credit cards - for smaller amounts of money that you wish to borrow, a credit card may be more suitable. However, interest rates can end up being quite high.
- Savings - if you’ve been putting away money for a rainy day, now may be an excellent opportunity to delve into those savings to solve any money woes.
Frequently Asked Questions
Getting a loan while self-employed can be tricky and confusing, so you must have accumulated a whole list of questions. And if we haven’t answered it already, take a look at the most frequently asked questions regarding self-employed loans UK below, as you may find the answer you’ve been looking for.
What is a self employed loan?
A self employed loan is a personal loan that is designed for people who own their own business or work as a freelancer. They are usually offered by lenders and can be either unsecured or secured against a property. They are available to people with either a good or bad credit score.
How does a self employed loan work?
Once your application has been successfully approved by a lender, the money you have agreed to borrow will be transferred directly into your bank account. You will then be required to repay the loan and accrued interest via monthly instalments for the period which is agreed with the lender.
How can I get a self employed loan?
In order to get a self employed loan you must complete an online application form. When filling out the online application form you will have to provide the following information in order for your application to be reviewed and accepted:
- How much you wish to borrow
- Over what period you would like to spread out the costs of the repayments
- Reason for wanting to take out finance
- Name, address and date of birth
- Marital status and number of dependents
Upon being matched with a personal loan lender, you may be asked by a lender to provide proof of your incomings and outgoings in the form of bank statements and tax returns. This will be to ensure that you can afford to repay the loan you wish to take out.
Can I get a self employed loan with bad credit?
Yes, you can get a self employed loan with bad credit. Lenders may ask for some more documentation to better understand your situation. That way they can make a more informed decision on how much to lend to you and what interest rate to charge on your loan.
Why choose iThink Finance?
At iThink Finance, we work with a panel of top UK lenders to help find the self employed loan you need. Our simple application form is easy to fill out so you can get an instant decision on your loan as soon as you’re accepted.
Are personal loans for self-employed workers regulated?
Yes, personal loans for self-employed workers are regulated in the UK. We are an authorised and regulated credit broker and are entered on the Financial Conduct Authority register. iThink Finance only works with reputable lenders that are authorised and regulated by the Financial Conduct Authority.
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