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Personal Loans for Self-Employed
Here’s the deal: We found that the best bad credit personal loans when you are self employed come from NetCredit, which we explore more deeply in this post. We also look at the best good credit personal loans for the self-employed (SoFi) and the best personal loans for the self-employed when it comes to customer service (Marcus).
In this post about personal loans for entrepreneurs, we explore what they are, how they work, how to get one and who they are best for. We also offer some great options that might be specific to your needs.
We’ve reviewed the best self-employed personal loans and brought you our top recommendations, using our proprietary SimpleScore methodology to evaluate each lender’s rates, terms, customer satisfaction, customer support and fees.
The 5 best personal loans for the self-employed
- Best for Good Credit: SoFi
- Best for Autopay Discounts: Citibank
- Best for Customer Satisfaction: Marcus
- Best for Bad Credit: NetCredit
- Best for Credit Card Debt Consolidation: Discover
Best personal loans for the self-employed at a glance
|Lender||APR range||Loan term||Min. loan||Max loan||SimpleScore|
|SoFi||5.99%–19.63% w/AutoPay||24 to 83 months||$5,000||$100,000||4.6/5|
|Citibank||7.99%–23.99%||12 to 60 months||$2,000||$50,000||4.2/5|
|Marcus||6.99%–19.99%||36 to 72 months||$5,000||$40,000||5/5|
|NetCredit||34.00%–155.00%||6 to 60 months||$1,500||$10,000||2/5|
|Discover||6.99%–24.99%||36 to 84 months||$2,500||$35,000||4.4/5|
*Data accurate as of September 2021
What is a personal loan?
Personal loans are unsecured loans used for big purchases, home improvements, or paying off medical bills. People often use personal loans to consolidate high-interest debt like credit cards or payday loans. A personal loan gives the borrower a lower interest rate, a single monthly payment, and a definite time limit for clearing the debt.
Since personal loans aren’t usually secured by a real estate deed or car title, the lender evaluates the risk by looking at your credit score, income, and debt load. Lower-risk borrowers qualify for higher loan amounts and lower interest rates than those who are considered high-risk.
How personal loans for self-employed work
Lenders for self-employed personal loans will look at your credit history and debt load, just like any other borrower. To confirm your income, you’ll need to provide some documentation. Tax forms that show your self-employment income are nearly always accepted; conservative lenders might want to see more than one year of returns, so they know your income is consistent. Nontraditional lenders will sometimes accept creative documentation, like bank statements that show your cash flow over a period of several months.
You could have your funds as early as the same day from some lenders. You’ll start making payments the following month and continue until the balance is paid.
If your lender doesn’t have a prepayment penalty, you can pay the loan off at any time, which could save you a bundle on interest expense.
Interest rates vary from one lender to another, so it’s worth your time to shop around. The APR — or annual percentage rate — will tell you that the rate you’re looking at includes all the costs associated with the loan, including fees. When you’re comparing two lenders, make sure you’re looking at both APRs.
APRs for personal loans range from below 6% for borrowers with excellent credit to 400% for high-risk customers taking out payday loans.
The best personal loans for self-employed customers typically come in amounts ranging from $1,000 to $50,000. There are a few lenders who make loans of as little as $500 or as much as $100,000.
The amount you’ll be offered will depend on your credit history, debt load, and verifiable income.
Your odds of being approved for the loan are much higher if you request a smaller loan amount. Smaller loan amounts also give you lower monthly payments.
Most personal loans for self-employed people have terms of two to five years, with a few lenders offering longer or shorter terms for particular circumstances.
You can calculate the total cost or the loan by multiplying the payment times the term. You might be surprised when you see how much the interest adds up over a longer term.
How to choose the best small personal loan for you
- Decide how much money you need to borrow.
- Calculate the monthly payment you can afford.
- Use free online resources to get an estimate of your FICO score.
- Think about any loan features that are especially important for you. Do you need a quick decision and fast cash? Would you like to be able to set up automatic payments?
- Review the lenders on this page to see which ones are the best fit for your needs and credit score.
- Read the full reviews of the lenders that seem like a good match for you.
- Approach your first-choice lender and see if you pass the prequalification process.
- If you qualify, and like the interest rate and terms you’re offered, complete the full application.
- If your first-choice lender declines your loan request, it will tell you why. Study that information and use it to select a second lender to approach.
Getting a loan with bad credit when you’re self-employed
Since the COVID-19 outbreak and social distancing, self-employment numbers have exploded. In fact, nearly 30% – or 44 million – Americans are self-employed.
If you’re one of the many self-employed individuals that have lost jobs or have trouble finding adequate work to pay the bills, you may yourself defaulting on loans and in financial trouble. Unfortunately, your credit has probably also suffered. For this reason, banks and credit unions may feel you are a credit risk and may hesitate to qualify you for a loan.
Thankfully, there are many online alternative lenders who will lend to self-employed individuals with fair or bad credit. Your interest rates may be higher, amounts lower, and you may have shorter terms, but if you need funds, there are options to consider.
Personal loan alternatives
If you’ve been turned down for a personal loan — or are just weary about taking on new or more debt — there are alternatives to consider if and when you need the funds.
- Open a savings account and put away a portion of every paycheck going forward. Even a small amount each month can add up over time.
- Have a garage sale, sell items online or over the internet. You might be surprised how much you can get for an item you no longer need. Books and games sell like wildfire on Facebook Marketplace or eBay.
- Ask a relative to co-sign for a loan, get a “back on track loan” or credit-builder loan. Each of these alternatives has pros and cons, but if you need the funds, the advantages might outweigh any negatives.
- Apply for a state or federal grant. You can research and apply online.
- In your spare time (assuming you have spare time), consider driving for Uber or Lyft.
- Walk dogs or babysit after hours.
Keep in mind that there are advantages –like making a little quick cash – and disadvantages with each of these options. You need a reliable car and clean driving record to drive for Uber or Lyft, applying for a grant takes time, you may not have spare time to take on another side-gig, and selling online requires packaging and mailing items, which also takes time. Even so, if you’re strapped for cash and can’t get (or don’t want) a personal loan, there are alternatives out there.
[ Related: The Best Installment Loans for Bad Credit ]
We welcome your feedback on this article and would love to hear about your experience with the personal loans we recommend. Contact us at firstname.lastname@example.org with comments or questions.