As you get your new business off the ground, you may find that you need liquid cash. Applying for a self-employed loan is a great way to obtain that liquid cash for your business. If you’ve never applied for one of these loans before, now is the time to learn how.
Can I Get a Loan Being Self-Employed?
It’s very true that verifying your income when you’re self-employed is more difficult than if you’re employed by someone else. As a self-employed individual, you don’t get pay stubs or W2s, which many financial institutions utilize to verify your annual income. However, you can utilize tax returns and transcripts and bank statements to verify your steady income stream. Additionally, you can opt for adding a co-signer or putting up collateral, if need be, to get approved for a loan when you’re self-employed.
Loans For Self-Employed Workers
According to Lantern by SoFi, “If you’re a one-person show, otherwise known as self-employed or an independent contractor, you might feel like there aren’t business loans targeted toward you. And you may wonder what your options are.” There are three main types of loans that you can likely get approved for as a self-employed individual.
The first is an SBA loan. You can apply for this type of loan through a bank that offers it. These loans tend to take a month or more for processing and do require lots of documentation. Your second option is a traditional bank loan. With this type of loan, you can enjoy low-interest rates. However, most banks require you to have a great credit rating to be approved.
Another option is applying for online loans. There are various lenders who solely accept online applications for business funding. The qualifications for these loans are going to vary depending on the specific lender that you’re going to be using. It’s best to compare business loans at different online lenders before deciding which one to go with.
Personal Loan Alternatives
If you have trouble getting financing for your business with traditional routes, you may want to consider personal funding. In this type of scenario, you’ll be borrowing money on a personal basis and using that money to fund your business. One easy option is to use a personal credit card. This type of card will allow you to charge any business expenses that you need which fit within your credit card limit.
Cash advances are another option where you can get cash from your credit card. This is perfect for paying those bills that you can’t fund with a traditional credit card payment. Another great option is a home equity loan or line of credit. You can borrow against the pre-existing equity in your home to get the funding you need for your business operations.
Sure, getting financing as a self-employed individual is harder than getting financed as an employed individual. However, with the many suggestions above, you’ll be sure to obtain the financing that you need to grow your business going into the future.