Is A Deposit Needed For A Self-Employed Loan?
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If you’re thinking of applying for a self-employed loan, you might be wondering how they work. Self-employed loans are generally similar to personal loans but are targeted towards sole traders or those who own their own business and may have trouble producing the documents needed to apply for a standard loan. This means that generally, a deposit is not necessary as a self-employed loan is just a personal loan.
Read on below to find out everything you need to know about self-employed loans.
How does a self-employed loan work?
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 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.
Is a deposit needed for a self-employed loan?
As a self-employed loan is generally a type of personal loan, a deposit is usually not needed. Most lenders will follow an application checklist, and read over the documents that you provide them with before approving your loan. In order to receive funding from a self-employed loan, no deposit should be needed by your lender.
What kind of loans are available?
If you’re a sole trader or self-employed, you may qualify for one of the following loans:
- Secured or unsecured loans- Generally, these are personal loans that you repay over an agreed-to period. 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.
- Specialist loans – These 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 might be someone with a need for finance who cannot meet the criteria put forward by traditional lenders.
- Low document loans – Can be used if you’re having trouble providing the number of documents needed for another loan. Low doc loans can be taken out using less documentation than what is required for a traditional loan. Typically, low doc loans are for potential borrowers who are self-employed or small business owners and don’t have access to the number of documents normally needed when applying.
What documents will I need to apply?
Generally, the eligibility requirements from lender to lender will differ, but in most cases, you might be required to have an ABN. Anything else that is required will differ depending on the loan that you apply for. However, you may need:
- Business Activity Statements – generally, most lenders will need 12 months’ worth of statements. This will help your lender decide whether or not you’re able to afford the loan given your turnover.
- Self-verified income declaration- instead of tax statements and other identification, you may need to sign a statement verifying that you earn the amount you say that you earn.
- A letter from your accountant – while being similar to the signed income declaration mentioned above, your lender might also require an income form signed by your accountant as an added form of proof.
- Previous bank statements – depending on which lender you choose, they may want to see statements from your business bank account. These could be for as far back as six months, or longer.
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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