Personal loans for self-employed borrowers

What is a self-employed personal loan?

A self-employed personal loan is a personal loan for people who are sole-traders or run their own business. While the application process is a bit different for self-employed personal loans, there are still plenty of options available to people who are self-employed. Typical options available to self-employed people include the following:

• Specialist loans. The first way is through a specialist lender who provides personal loans for self-employed people. These may include lenders that offer self-employed loans for tradies or personal loans for ABN holders.
• Standard personal loans (secured or unsecured). You can apply for any standard personal loan if you can meet the documentation requirements as an employed person.
• P2P loans. You can also submit an application to a P2P lender if you meet the eligibility and employment criteria.
• Low doc loans. If you cannot meet the doc requirements, you can apply for a low doc loan, which requires fewer documents, although this type of loan is usually more expensive than a traditional loan.

How can I get a personal loan if I’m self-employed?

If you have a long-established business with a steady cashflow, or have been a sole trader or independent contractor for years, your chances of approval are better. Borrowers who have just set up a business will struggle to prove they can repay the loan.

As a self-employed borrower you also need to make sure you meet the lending criteria for the personal loan you're applying for.

Don't apply for a loan if the lender requires evidence you can't provide.

Do I need to apply for a low doc loan?

Low doc loans can be a useful resource for self-employed people who may not be approved for a standard personal loan. They require less documentation than traditional loans, which means a quicker and easier application process. So, if you struggle to prove your income or assets, you may find it easier to be approved for one of these loans.

Low doc loans have higher rates and fees than standard loans, especially if you're dealing with a specialist lender. So, you don’t want to apply for one unless it’s your only option.

What documentation do I need?

• Tax returns. Be prepared to show the last two years of your full personal and/or company tax returns. These will help prove any income you declare on your application.
• Financial statements. These may include any profit/loss statements to also support the income you declare.
• Proof of rental income. If you have any income from rental properties, you can declare this with real estate statements or copies of your executed lease agreements.
• Notice of Assessment. Make sure you have on hand your latest Notice of Assessment (NOA) given to you by the Australian Taxation Office (ATO). This shows tax information such as the amount of income tax you owe(d). Depending on the lender, you may need to provide your NOAs from the last two years.
• Recent bank statements. This includes statements showing your savings and business transactions. It may also include statements showing any other outstanding loans or credit cards you have with other lenders.
• Company-specific information. If you own your own business, be prepared to provide information such as your company’s ABN, address, etc.
• Personal identification. Depending on the lender, this may be your Australian driver’s licence, passport or proof of age card. You’ll either need to copy your ID and fax it over to the lender or scan it and attach the digital file to your application.

Are self-employed loans more expensive than standard personal loans?

As mentioned earlier, low doc loans are usually more expensive than standard personal loans. This means that you should try to qualify for a standard personal loan before you look for a low doc loan.
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Keep in mind that many banks and alternative lenders may offer loans that aren’t more expensive than standard loans to self-employed individuals. Make sure you’re comparing all options and that you’re aware of exactly what’s out there before deciding to apply with any particular lender.

How can I compare my options?

Keep in mind the following factors when comparing the loans offered by different lenders:

Why compare personal loans with Finder?

Addicted to details. We know taking out a personal loan is something you'll be hooked up with for a while. That's why we put hours into research for this guide (and still do at least once a month)

Rates obsessed. Lenders come in all shapes and sizes, that's why we don't just track the big banks, but all the digi folk too. Pretty much everyone but your parents to be honest.

Cash for whatever you need. Lending rates verified from 180+ products day and night. Whether you're buying a car, rennovating your home or heck just ready to let loose with the spending - we got you.

Frequently asked questions about self employed loans

• How much can I apply for?

  This depends on several factors such as your particular lender, your requested loan amount and how well you meet eligibility requirements. You can always find out the minimum and maximum loan amounts offered by a lender by clicking through to the particular lender's review page using the table on this page.

• What pitfalls should I avoid when applying?

  Make sure you understand exactly what you need the loan for and avoid getting mired into too much debt. This means that you should avoid applying for loans if you don't actually need them. Also, make sure you never apply for more money than you actually need.

• What are some extra tips to help me qualify as a self-employed applicant?

  First, always check that you meet all eligibility and documentation requirements before applying for a loan. Secondly, consider having a guarantor sign off on your loan, which would help alleviate any hesitation on the part of the lender. Finally, you can file a joint application with another person, where you and the second party would be equally responsible for the requested loan.

• Can I take out a self-employed personal loan without proof of income?

  You'll find it very hard to get a personal loan if you don't have any evidence of income, whether you're running a small business or working as an independent contractor.

  You may be able to use business assets as an alternative to proof of income.

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Written by

Elizabeth Barry

Lead Editor

Elizabeth Barry was the lead editor for Finder. She has over 10 years' experience writing about a range of topics with a focus on personal finance. You’ll find her writing and commentary in a range of publications and media including Seven News, the ABC, MSN, the Irish Times and Singapore Business Review. See full bio

Elizabeth's expertise

Elizabeth has written 211 Finder guides across topics including:

• Banking
• Personal finance
• Investing

Co-written by

Richard Whitten

Editor

Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification. See full bio

Richard's expertise

Richard has written 554 Finder guides across topics including:

• Home loans
• Property
• Personal finance
• Money-saving tips