Applying for a Personal Loan While Self-Employed
Applying for a personal loan while self-employed can be challenging. However, lenders may be more likely to approve you if you provide extra proof of income for self-employed individuals. Proof of income may include bank statements, profit and loss statements, Social Security benefits statements, or court-ordered agreements. If you can't get approved, you may need to explore alternative financial products.
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UPDATED: Jun 29, 2022
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- Getting a personal loan while self-employed is possible, but it may be more challenging than for W-2 employees
- You may be able to provide proof of income with bank statements, profit and loss statements, Social Security benefits statements, or court-ordered agreements
- Other financial products for self-employed individuals may include credit cards, cash advances, home equity loans or lines of credit, and business loans
Personal loans can be used for many different reasons, including large purchases, vacations, weddings, starting a business, and more.
However, applying for a personal loan while self-employed can be more complicated than for a traditional employee.
Below, we’ll discuss what kinds of income verification self-employed individuals can provide and what financial product alternatives are available.
If you need help finding a personal loan while self-employed, enter your ZIP code above to compare rates from lenders in your area.
Can I get a personal loan while self-employed?
While applying for a personal loan while self-employed is possible, it can be more challenging than someone with a W-2 job. Many lenders rely on W-2s, tax returns, and pay stubs for income verification, but self-employed individuals may not have these or may need additional documentation.
You may need to search out a lender that will allow you to provide alternative proof of income.
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How can I prove my self-employment income?
There are multiple ways to provide proof of income for self-employed individuals, including bank statements, profit and loss statements, Social Security benefits statements, and court-ordered agreements.
Bank statements can help prove income if they show regular deposits into your account. However, you should keep your business and personal transactions separate and may want to provide proof of both.
A profit and loss statement can prove that regular income is coming through your business. It shows income, expenses, and revenue.
You may also provide a Social Security benefits statement, which shows how much an individual will receive after they retire.
If you’re already receiving Social Security benefits, you may be able to provide proof of this income to qualify for a personal loan.
If you are entitled to child support or alimony, you can provide the lender with the court-ordered agreement that outlines how much you receive and how often.
Many lenders are aware of the fact that self-employment is growing in the U.S. Therefore, they are open to accepting self-employment documentation. However, getting a personal loan with no income verification is sure to be difficult.
What other financial products are available?
If you cannot get loans for self-employed individuals, you may want to explore other financial products, such as credit cards, cash advances, home equity loans or lines of credit, and business loans.
Credit cards may give you a little extra to spend while helping you build your credit history. However, be sure to pay your bills on time.
Some credit cards may also give you access to cash advances, but these can have higher APRs than regular credit card purchases.
If you have a good amount of equity in your home, a home equity loan could give you a lump sum of money, while a home equity line of credit allows you to pay on only the amount you owe.
If you are searching for a loan for business purposes, it may be an option to apply for a business loan. However, these cannot be used for personal purchases.
If you are looking for a personal loan while self-employed, enter your ZIP code below to compare lenders in your area.
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