Can I Get a Loan If I’m Self-Employed with Irregular Income?

If you share doubts about whether you may get a loan as a self-employed individual, read ahead. The blog lists the possibilities and the loan options that you may get.

1 day ago

If self-employed and seeking a loan, uncertainty lingers. You may find yourself at a crossroads – where to begin? Sole traders struggle getting a loan due to limited operating history and credit. It thus leads to reliability issues for the creditor. Hence, one does not get immediate approval on loans. Irregular income proves another big obstacle to securing a loan. Does it imply you can never get a loan? Well, it is false.

There are some options that new and existing self-employed individuals can check. It may help you fund the immediate or future business requirements without worries. Check self-employed loans, which help you meet any of your company requirements without worries. These loans are exceptionally suitable for the situations one faces as a sole trader. Therefore, qualifying with these loans gets a bit easier in comparison to traditional loans.

Who can get a loan as a self-employed?

You generally need to meet basic criteria set up by the loan providers. It may differ according to the loan type, and the lending company’s personal mission and preferences. Here is what you may need to meet if applying for a loan as a self-employed individual:

You should be a permanent self-employed, paid employee and retired with a pension
Should be above 21 years of age
You should be a regular citizen of the country, having a permanent residential and business address
Have an annual income over £10000
Must have a valid business or personal bank account
Should have a detailed business plan (if a business owner)
You should be able to afford the minimum monthly payments

How will lenders decide on self-employed loan applications?

Most unsecured loan providers decide the loan approval based on your financial and personal circumstances. They check with credit agencies to get an updated credit report for you. It helps them get a better overview of your finances, income, savings, and monthly expenses. However, you may still need to share your bank statements for verification for the loan.

If you hold an irregular income, the loan providers verify the average income for 12 months. It provides a clearer idea of how much income has been coming in. Don’t worry if your income varies from month to month.

It is natural for a self-employed individual to witness the highs and lows. However, whatever the income is, it should be a consistent one. Additionally, you must prove that you are good with managing money. You can create credibility by proving how you managed finances in the past. That’s the primary aspect which may help you get the loan instantly.

You can prove it by revealing constant payments on the credit cards, utility bills, rent, etc. However, if you are currently jobless or amid starting the business, you may struggle meeting these goals. Here, you can check on loans for the unemployed in the Ireland marketplace. It may help you meet the requirements immediately. You just need to reveal any basic source of income (a part-time one).

Which loans can you get as a self-employed?

Just like usual employment-based individuals, your requirements may differ too. Therefore, you may get different personal and business loans according to the purpose. Here are some loan types for which you may qualify as a self-employed:

Personal loans

You may encounter an urgent need for cash anytime. You may need one to pay the bill, repair the home, or change the car’s parts. If you lack enough flexibility as a self-employed individual, tap personal loans. You may get up to €25000 for any of your individual needs. Yes, you can use the loan for small business purposes also. The flexibility of managing the loan according to your comfort makes it a popular option among individuals. Moreover, paying back a personal loan helps boost the credit score.

Car finance

If you want to buy a car as a self-employed individual, check the car finance option. It helps you spread the cost of purchasing a car in easy instalments. However, unlike a car loan, providing a deposit is mandatory here.

You generally must pay 10% of the car’s price as a deposit to get the loan. It increases the chances of getting one as a self-employed individual. You can choose from hire purchase, PCP, Contract Purchase and other car finance options. Analyse each in detail and check which one aligns with your situation the best. In some options, you can even exchange the car or buy one by paying the balloon payment.

No guarantor loans

It is a type of financial facility that does not involve a third-party guarantee to qualify. Instead, individuals with consistent income and fair credit score may qualify. You may seek a no guarantor loan to meet your small and medium-term requirements. However, the payout stays only up to €10000 on these loans. It may help you pay the overdraft fees, update the business software, laptop repairs, etc. One may use it for any personal and business purposes.

Quick loans

If you ever encounter short-term and time-sensitive cash needs, tap quick loans. It is an instant financial facility which helps you get cash within 30 minutes. Self-employed with bad credit history but consistent operations may get quick loans in Ireland cheaply. However, you must prove that you have been operating for at least 6 months consistently. The pay you get may vary; however, there should be no (Zero earning month) lately to qualify. The amount you may get here is €3000 just for the critical emergencies.

Secured finance

It could be an option for self-employed individuals having multiple business assets and needing a high amount. You may need one to invest in equipment purchase, product development, or developing office infrastructure. Here, the asset that you provide as collateral must be worth more than the loan amount required. The amount you get depends on the requirement and the value of the collateral.

Moreover, you must possess the ability to repay the dues. Otherwise, the creditor may claim the asset legally. A secured loan helps you fetch a higher amount at low interest rates. Thus, individuals with bad credit scores and inconsistent income may benefit from this arrangement.

Bottom line

A self-employed individual may find it hard to get a loan for personal or business purposes. It is about improving the chances of loan approval. Ensure updated credit report, ensure a separate bank account for personal and business expenses. Additionally, apply for the amount which you can fairly afford. Provide the authentic proofs of yearly income and bank statements.
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