You know when applying for a loan at any institution, they always ask for your employment details but what if you’re self employed, how do you get a loan when you need it the most. In the banking business, self employed individuals are considered high risk candidates.
Your monthly income as a self employed income is obviously unreliable. For example if you have a small plumbing company, making you enough money to survive but according to the banks, it is more harder to calculate or determine how much you will be able to afford since they don’t have your credit record in the system.
Don’t be scared, you won’t get an immediate rejection without them understanding your financial status. Please note that depending on your financial history, there will be certain loan types which you can’t qualify for but will definitely get one.
How to qualify for a loan when you’re self employed?
The first thing to do with your quest to getting a loan is to prepare and have your financial history documents in order. Whatever you do or have done, please ensure you have a good credit record like handling your bills on time. You definitely need a minimum of six months banking statement to prove to whichever institution that you can afford the loan. The statement should reflect all your transactions month to month.
Assure the banks that your business will pay you for the term of the loan. Provided detailed statement of your monthly salary from the business. Remember you application will go through the affordability assessment and only you can pass the test by providing accurate information in support of your application.
You can qualify for both secured and unsecured loans depending on the information provided as well as from the assessment. Unsecured loans will not require any sort of collateral or security to use against your loan amount, funds will be made available to you based on the information from the affordability assessment.