Personal loans for self-employed individuals can provide funding to make it easier to become and remain your own boss. However, as an independent contractor, you may discover that lenders will evaluate your application differently.

Self-employed incomes fluctuate more and are less reliable compared to those associated with an established employer. You will repay your obligation from future earnings, so expect the lender to look more closely at your application.

Lenders may discount your earnings. However, you may still be eligible based on your documentation, risk rating, your profession, and the type of account you choose to open.

Personal Loan Eligibility for Self-Employed

Personal loan eligibility for self-employed individuals comes down to demonstrating a strong risk rating, a verifiable stream of income, and a manageable monthly debt burden. For many entrepreneurs and freelancers, proof of income is the biggest hurdle.

Request a personal loan here. A high credit score can overcome any difficulty in verifying income. Complete the online form, and get a fast answer. Find out where you stand and if you qualify.

Proof of Income

Personal loans for the self-employed without financial documents such as proof of income may be possible. Lenders consider three criteria, your risk rating, income, and debt to income ratio.

Without proof of income, you cannot perform well on the last two criteria. Therefore, new solo workers must be able to show an excellent credit score. Many lenders will approve smaller amounts using the risk rating alone; when the applicant’s consumer report is pristine, and their credit score is above a specified threshold – perhaps 740 and higher.

First-time borrowers may find it difficult to qualify when they have no proof of income documentation.

Bad Credit

Self-employed people with bad credit history face an uphill battle when trying to qualify for a personal loan. They start the process with one strike already against them. They must perform well on two other income-related factors to counterbalance their poor risk rating.

Those with bad credit must be able to document a strong income history, combined with a low debt to income ratio. They must provide several years of profit and loss statements demonstrating stable earnings. In addition, the ratio of monthly income to monthly debt service should be below 20%.

Notes with low monthly payments tend to have smaller principal amounts and longer repayment terms.


Self-employed professionals face different obstacles when trying to qualify for a personal loan, depending upon their education levels and the barriers to entry into their field.

A high debt to income ratio may make it more difficult for many professionals to qualify. For example, doctors and lawyers require post-graduate degrees in order to work in their chosen field. They may carry significant student loan debt, which they must repay monthly. On the other hand, they must pass rigorous exams, which limits job competition and leads to higher and more reliable incomes over time.

Other professionals such as engineers, financial advisors, nurses, and independent contractors may only need an undergraduate degree, which means they may carry less student loan debt. On the other hand, their industry exams may not require the same investment, which allows more competitors to enter their field of work.

Types of Personal Loans for Self-Employed

Self-employed individuals can choose between several types of personal loans. Each type has different advantages and disadvantages for people who work for themselves.

Request an unsecured personal loan here if this option makes the most sense. The alternatives are secured, and business loan types.


Unsecured personal loans probably are the best answer for most self-employed people, but they often come with higher interest rates than other alternatives. This option does not require collateral, which explains the broad appeal. You do not have pledge any of your assets. Your signature acts as your promise to repay the obligation according to terms.

The interest rate is higher to account for the greater risk and higher lender losses in the event of a default. The lender cannot seize your property to offset losses.


Secured personal loans allow the self-employed to borrow money against the equity in their home or car, a sometimes against future earnings in very limited circumstances. Secured loans offer lower interest rates and better approval odds because the lender can repossess the collateral in the event of default.

  • A home equity line of credit provides flexibility to tap funds during a draw period.
  • Title loans can free up capital if you own your car free and clear.
  • Payday loans can address emergency cash needs if you have a reliable pipeline.


You can utilize a personal loan to help fund your self-employed business. Lack of capital is the number one reason why most small businesses fail. Therefore having access to cash when you need it may be critical to your long-term success. Choose the ideal option for your needs.

An unsecured personal loan may be best if you are just starting out; you need a cushion of cash to pay your living expenses while you build your business, or if your trade is not capital intensive. This option might fit well for artists, graphic designers, nutritionists, nannies, programmers, yoga and Zumba instructors, etc.

A traditional business loan may be the better option if your business requires capital assets such as a building, heavy equipment, or a fleet of vehicles. This option may work best for landscapers, plumbers, truck drivers, welders, etc.

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