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Do I Need To Be Making A Profit To Get A Self-Employed Loan?

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If you’re new to owning your own business, it may be useful to have a loan to help you cover costs, or to make purchases for your company. However, some loans require you to have been in business for a certain amount of time, and to be making a profit before they will lend to you. Depending on the type of loan and the lender to who you’ve applied, it may be possible to secure a loan if you’re a newer business. Read on below to find out some of the options that may be available to you.

What Is A Self-Employed Loan?

A self-employed personal loan is a personal loan for people who are sole-traders or run their own business. While there is no specific type of loan called a ‘self-employed loan’, there are several loan options available that are tailored to the self-employed.
In some instances, these loans require significantly less documentation than a standard loan, while being specifically designed for borrowers who do not have access to the usual documents required for a loan.

Do I Need To Be Making A Profit To Get A Self-Employed Loan?

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If you haven’t been turning a profit yet, it could be possible to try to apply for a low doc loan. With these types of loans, you typically do not need to provide the level of documentation that you would with a traditional loan. In a low doc loan, it’s possible that special consideration may be taken for being in the same line of work for many years, even if your profits are limited. Of course, this would be up to your lender.

How Long Should I Have Been In Business For?

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As a general rule, you usually need to have been in business for at least 18 months, or you need to have been in the same industry for at least two years. This isn’t to say that every lender abides by this guideline, so it is best to check with your lender when you begin your application.

The Different Type Of Self-Employed Loans

Specialist loans are loans that are done through a specialist lender who provide loans for those who are self-employed. You may need a specialist due to your credit score, loan purpose, needing a loan after bankruptcy or not meeting the income verification requirements. Generally, if you’re a specialist borrower, you’re someone with a need for home loan finance who cannot meet the criteria put forward by traditional lenders.

Secured or unsecured personal loans are a lump sum payment that you repay over an agreed-to period of time. Repayments typically include interest on top of the loan, which is a percentage of the principal sum of the loan. The interest rate on these loans can either be the standard rate, or a comparison rate. A secured loan is a loan guaranteed by an asset, for example, a car. Your lender would use this asset as security, which means that if you cannot make the agreed repayments your lender could take possession of the asset and sell it to cover the cost of the loan. Having this security means that the lender can offer you a lower interest rate for the loan.

Low document loans are used when the borrower cannot meet the required number of documents needed for another loan. Low doc loans can be taken out using less documentation than what is required for a full documentation loan. Typically, low doc loans are for potential borrowers who are self-employed or small business owners and don’t have access to the documents required to be approved for a traditional mortgage.

What Do I Need To Apply?

There are basic requirements that most loans require, such as:
• Employment details
• Savings history
• Outstanding loans, such as a car loan or a personal loan
• Existing assets, such as real estate, or investments.

However, if you’re self-employed and want to apply for a loan, you will typically also need to provide proof of your business’ financial position. This may include:
• Company tax returns
• Other financial statements, such as a profit and loss statement
• Personal tax returns

Depending on your lender, these requirements may change.

Where Does Tiger Finance Come In?

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With Tiger Finance, we can help to get you a loan in four easy steps. You will have a free consultation with one of our specialists, and we will tailor-make you a loan. We will negotiate with lenders on your behalf before you are approved.
We have helped countless Australians with both good and bad credit ratings to be funded to help with their dream start-up. We understand that lending criteria from other lenders are too strict and can stop you from achieving your goals. That is wrong, and it should not hold you back.

How We Can Help

Our finance specialists can help you find the right loan for your project. Self-employed loans are a complicated topic, but we will find a loan that makes your dream project that much easier.
If you are one of the many Australians finding getting a loan difficult, Tiger Finance can make the process simple and pain-free.

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