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What Are Self Employed Loans?

Jun 13, 2008
Self employed loans are similar to regular loans but it can be difficult for people who are self employed to qualify for regular loans because often people that are self employed don't have the same kind of verifiable income that someone who works for a company and get a steady paycheck would have. So when someone who is self employed needs to get a loan for a new home, a new car, for school, for debt consolidation or any other reason that person needs to get self employed loans.

Self employed loans use a different formula to calculate income. A no-income loan is another same for a self employed loan although the person getting the loan still does need to provide proof of some income. To qualify for self employed loans companies will need to see proof of all of the income that you have made in a set amount of time, usually anywhere from six months to two months. Then the lender will take an average of that income and assume that is your average monthly income for the entire year.

The loan that you qualify for will be based on that monthly income. So if you go in to a lender to see what type of self employment loans you might qualify for you should be ready and have at least six months worth of verifiable income documents like bank statements or checks to show the loan office. Getting self employed loans is often difficult and you might need a co signor or some collateral, like a house, to get a large loan.

If you are trying to get self employed loans it also helps to go to the bank where you have your business bank account because they might be willing to give you a business loan instead of self employed loans. There are ways to get self employed loans even if you don't make a lot of money yet but you might have to pay a higher interest rate then someone who has a traditional company with a company and has a verifiable income would pay.

But being self employed doesn't mean that you will never qualify for loans and that you will never be able to get a home loan or a mortgage or a car loan or other loans. There are self employed loans and there are banks and lenders that specialize in self employed loans so if your regular bank turns you down for a mortgage or loan go to a lender that deals only with self employed loans and you'll have a much better chance of getting the loan that you need. And always when you go in to inquire about self employed loans have a cleaned up copy of your credit report with you.

Your credit report is always important when you're trying to get a loan but it's even more important when you're searching for self employed loans. You should go through your credit report from all three of the major credit bureaus regularly to make sure that there is nothing outdated or inaccurate on your credit report.
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