If you are self-employed, you may need a little financial help. Here’s some advice on how to find it.
More than 4 million people in the UK are registered as self-employed, living the dream of being their own boss; but it does come with its disadvantages. Not only can it be difficult to afford a new car or make much-needed repairs, getting your hands on a loan can be challenging, too.
Since the most recent financial crisis, lenders can be understandably cautious – particularly with those considered to be more of a risk. But there are a number of excellent products available if you can demonstrate that you’re a responsible borrower.
The reality of self-employment
If you’re new to being your own boss, you’ll be used to the security of a monthly salary. Now you’ll have the same household and family outgoings, but without the regular pay cheque. You may also be facing a number of expenses involved in setting the business up that can vary dependent on your own personal circumstances - whether renting a premises or buying a new home computer.
It’s difficult to sail into self-employment without any finance readily available – ideally enough to keep you, your family and any other dependents going for the first six months. Hopefully you may have built up some savings before taking the leap into self-employment, but a loan can be a helpful financial cushion.
How to get a self-employed loan
If you’re looking for a helping hand, a specialised self-employed loan could be the answer to your financial problem. Many lenders offer these and will understand that being classed as self-employed can make getting a loan that bit more difficult. You may find that the application process varies between lenders, but you’ll always need robust evidence to show that you’re an acceptable risk – most will be looking for at least a six month history of personal and business bank statements to get the ball rolling. In some cases, you will be able to borrow up to £500,000, which can be spread across a time period you are comfortable with.
Being classed as self-employed can also make getting a mortgage tricky, but that doesn’t mean it’s impossible. To get a mortgage, you will need to show two year’s account or tax returns that demonstrates a healthy track record of regular work.
Getting a loan if you have a poor credit history
Wondering if there is any chance of getting a self-employed loan if your credit history is poor? The answer is yes – there are some lenders who will help you, even with a bad credit score. It’s worth looking around online – but you need to be sure that you’ll be able to meet the monthly repayments.
Self-employed loans are an essential financial tool for keeping afloat when times are temporarily tough. Just make sure, as always, that your planning is watertight – and take advice where you’re unsure.