Personal loans for self-employed people

By   |   Verified by David Boyd   |   Updated 18th August 2021

  • Do you need to borrow money but are self-employed?
  • Should you consider a secured or P2P personal loan?
  • Find out what types of personal loan you could be eligible for and alternative options.

Managing your own business is all fun and games until you need extra cash. An unsteady income or lack of trading history can make it harder to access a personal loan.

Here’s how self-employed people can get a loan and what other alternatives they have.

Can you get a loan when self-employed?

As a self-employed person, you can get a personal loan. However, eligibility requirements can make the process tricky, and you may find it hard to prove your income or any assets you may own. Generally, you’ll need at least two years of tax statements to qualify as a self-employed borrower.

Types of self-employed loans

There are various types of personal loans for self-employed people.

  • Specialist loans. These are personal loans specifically designed for self-employed people, including ABN holders.
  • Standard loans. Self-employed people, for example, freelancers and casual workers, can apply for a loan with some banks. Applications for a secured loan (that require you to use assets as security) are more likely to get approved, but you will still have to supply documentation much like an employed individual.
  • P2P loans: P2P lenders such as SocietyOne use money from investors to fund personal loans and usually require less documentation than a traditional bank. Some loans are approved in 24 hours, and most are unsecured, meaning that you don’t have to use assets as collateral. However, these loans are often more expensive and have shorter terms.

Required documents

You can expect to be asked to provide the following documents.

  • Proof of identity (ID card, passport, etc.)
  • Proof of address (utility bills in your name, bank statements, etc.)
  • Proof of income (generally, at least two years of tax statements)
  • Documentation regarding any collateral required by the lender

Alternatives

A personal loan is an excellent choice if you need a lump sum of money for a larger purchase. For instance, you could use a personal loan to buy a new car, make home improvements, go on a holiday, or even fund your business. However, if you only need a smaller amount to manage your cash flow, you could consider these alternatives.

  • Credit cards. Banks like NAB accept any taxable income when applying for some of their basic credit cards.
  • Bank account overdrafts. Similar to a credit card, overdrafts give you instant access to funds up to a certain limit agreed with your bank. They have their pros and cons though.
  • Afterpay: The popular BNPL service allows you to pay for your purchases over six weeks without paying any interest and won’t pull your credit report when opening an account.
  • Apply with a guarantor: If you need access to a larger amount of money, but lenders require more documentation, you could consider applying with a guarantor.

FAQs

Does it take longer to get approved when you’re self-employed?

It should not take longer to get approved due to being self-employed, but it might take more time to gather the required documents.

Can I get a loan if I’ve only recently become self-employed?

You will usually have to provide at least two years of tax statements, so you may not be able to get a loan if you’ve only recently become self-employed. However, you may still be able to get one of the alternatives.

How long does it take for funds to arrive?

Processing times vary from lender to lender, but you could get the money in as little as 24 hours.

What can a self-employed personal loan be used for?

Self-employed personal loans can be used for most purposes, including:

  • Buying a car, motorbike, boat, or similar vehicle
  • Covering an unexpected bill
  • Medical or dental bills
  • Home improvements
  • Holidays

Some lenders specifically prohibit funds being used for business purposes.