Self-employed people often find it harder to apply for a loan. And they are the ones who often need him especially urgently, for private and business purposes. Various banks refuse to lend to the self-employed because the income of the self-employed varies from month to month. Even those who have been very successful in self-employment for a number of years often find it difficult to get a self-employed loan.
Self-employed persons are subject to different conditions when granting loans than to loans for employees. Even freelancers are counted among the self-employed. One way to apply for a self-employed loan is still the house bank, especially if you have longstanding relationships with them and have a permanent contact there.
The conditions for a loan for self-employed are less favorable than for a loan for workers, the self-employed must pay higher interest. Anyone who wants to benefit from low interest rates as a self-employed person, however, need not completely give up hope, because some direct banks offer loans for self-employed, which are characterized by low interest rates and a fast allocation.
1 Self-employed loan – different uses
In principle, the loan for self-employed persons is divided into two uses: the loan for private purposes and the loan for entrepreneurial purposes. For both purposes, the loan for self-employed:
- For the car purchase
- As a construction loan
- As a modernization or renovation loan
- For the real estate purchase
- For a debt restructuring
be requested. A self-employed loan for personal use can also be used to bridge a financial bottleneck. An entrepreneurial loan is often required for expansion, for example, to expand production facilities and buy new machinery. Often, self-employment loans are required to fulfill an important job and to purchase the right machinery and equipment.
Since the client often makes no or only a small advance payment and as a self-employed person often does not have sufficient reserves, such a loan for the self-employed is often required, it is often necessary for survival. So that everything can be procured quickly, it depends on a quick provision of financial means, an instant loan for self-employed may be required. Such an instant loan can only be applied for online, because it depends on a quick processing of the loan application, which is not possible at the house bank. Not all direct banks provide instant loans for the self-employed; Many direct banks use interest rates on loan for the self-employed to protect themselves against a default.
1 The credit check for self-employed person
In the case of loans for the self-employed, the credit check is particularly strict, and the banks are protecting themselves against a default. However, for many self-employed people, credit to secure their livelihood is essential, such as paying salaries to employees, covering current expenses in the event of a financial bottleneck, or carrying out an important job. While employees can benefit from favorable conditions for their loans in times of low interest rates, this looks different for self-employment loans. All banks make sure that the borrower can repay the installments permanently and punctually, which is not always guaranteed for the self-employed due to fluctuating income. While some banks do not lend credit to the self-employed, other banks are examining the conditions for individualization, which is also the case with some online banks, who do not generally refuse to lend to the self-employed.
To check the creditworthiness of the credit Self-employment other than the loan for employees is required, because self-employed have no income in the same amount and no employer. If you want to apply for a loan for the self-employed, you have to go to the credit check:
- Income tax certificates
- Profit and Loss Statement
- Income and surplus account
- bank statements
submit. This evidence is required, regardless of whether you want to apply for the self-employed loan for personal or business use.
2 For example, the creditworthiness of the self-employed loan is checked
The Bank assesses the loan application, where self-employed persons must provide information on the amount of the loan, the duration, the purpose and their business, and the evidence submitted, and checks whether it is even possible to lend a loan to the self-employed.
If a loan can be granted, the level of interest is determined by the rating, and the lower the credit rating, the higher the interest on the loan for the self-employed. Not only the credit for workers, but also the loan for the self-employed a Credit bureau information is obtained. If there is a negative Credit bureau entry, the loan can not be granted.
3 What to do if the Credit bureau entry is negative
There are still several dubious providers who lure the self-employed loan without Credit bureau and charge a high processing fee, even if the loan for self-employed is not granted. They often bring the self-employed to their existence. If there is a negative Credit bureau entry and a loan for the self-employed is needed, it is still not completely hopeless to get it. If the loan for self-employed persons is to be applied for a private purpose, it can be requested through reputable intermediaries who work with banks abroad.
Since these banks are mostly based in Switzerland, other conditions apply, a Credit bureau information is not obtained. However, as with the self-employment loan with Credit bureau information, collateral is required. The income and expenses must be in a reasonable ratio, collateral such as real estate or life insurance have a favorable effect on the conditions.
If the self-employed person can not provide the necessary securities, he must provide a guarantor who can do so. The loan for the self-employed should be requested only at a low level, so that the existence is not endangered. After all, there are two things at stake in the loan for the self-employed: existence as a self-employed person and private existence ; it is important not to land in the debt trap, there is always the danger of bankruptcy.
4 options if the loan for self-employed is rejected
If the application for the self-employed person’s loan is denied, self-employed persons can still try it through a credit marketplace and apply for personal loans for self-employed individuals.
On credit marketplaces private individuals have come together who are willing to lend. The loan for self-employed should however be applied for at a low level and for private purposes, the interested party must create a loan project with loan amount, repayment term and intended use.
The potential lenders decide if they want to lend the loan to the self-employed. Self-employed persons who need a car for private or professional purposes can apply for self-employed car loan. It’s not that hard to get it, because the purchased vehicle serves as security, which leads to favorable terms.
5 Conclusion: The most important thing about a self-employed loan at a glance
- Due to the volatile income situation, lending is extremely strict even among self-employed and freelancers who have been successful for many years.
- Self-employed people often rely on credit for countless reasons – investments, payroll, important assignments or private purposes are common examples.
- Special securities (proof of income tax, profit and loss account,…) are mandatory.
- Providers who offer self-employed loans without Credit bureau information are unfortunately often dubious. It is best to try it on credit markets in this case.