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Is A Specialist Lender Needed For A Self-Employed Loan?

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If you’re looking at applying for a self-employed loan, you might be wondering if you’ll need to apply with a specialist lender. In some cases, you might. If you have been in business for a short time, or your credit score is on the lower end of the scale, a specialist lender may be a good option. Otherwise, private lenders are generally able to help you with self-employed loans.

Read on below to find out more.

How does a self-employed loan work?

A self-employed 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 cases, self-employed loans can require less documentation compared to a traditional loan. This can be helpful if you’re struggling to meet the required documentation during the application process. Generally, a self-employed loan may require you to provide tax returns and payslips to prove that you can meet the repayments of your loan.

A self-employed loan isn’t too different from a regular loan, depending on which type of self-employed loan you choose. Each lender may have different interest rates for their self-employed options, as well as different levels of flexibility. 


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Is a specialist lender needed for a self-employed loan?

In some cases, a specialist lender may be needed for a self-employed loan. If you have a bad credit score or have been in business for less than 18 months, you may need to apply with a specialist lender. Generally, private lenders will be able to offer self-employed loans, and you may find that they have an easier approval checklist compared to traditional lenders.

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Why banks don’t like to lend to self-employed individuals

Lenders often see self-employed individuals as more of a risk compared to other applicants due to the risk of small businesses failing. Some self-employed people may find it harder to prove their regular income or any assets that they own. Income fluctuations can come with being self-employed, which doesn’t help when most lenders want to see a stable profit record. To lenders, a bad few months of inconsistent income may make repayments hard.

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. It can be difficult to get a lender to approve your loan when you are a sole trader. However, these days, more and more Australians are working for themselves across various fields and industries.

What to look for in a lender

If you’re searching for a self-employed loan, it’s important to be aware of what to look out for when choosing a lender. Your lender should offer you flexibility while being understanding about your circumstances. They should also be understanding of any unforeseen financial circumstances that may arise. You may want to find out whether your lender accepts alternative documentation for credit approval, and whether they offer fixed or variable interest rates on their loans.

The different type of self-employed loans

If you are self-employed or a sole trader who has been turned down, don’t despair. While the application process may be a little different, there are still plenty of options for you to choose from.

  • 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.

Where does Tiger Finance come in?

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 get funding. 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. Getting a loan can be complicated, but we will find a loan that makes the process 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. Call and speak to one of our loan specialists today for your free initial consultation.

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