How To Get A Self-Employed Loan If Your Income Fluctuates
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If you’re a self-employed individual or are a sole trader, you might be wondering if it is possible to apply for a self-employed loan if your income fluctuates. In this case, you may be able to apply for a low doc loan, which is a loan that requires fewer documents when compared to standard loans. You may also find a lender that will look at your income over a longer period than usual, to help you to show that you do have a form of steady income.
Read on below to find out what options are available to you if you’re self-employed with a fluctuating income.
How to get a self-employed loan if your income fluctuates
If you’re needing to apply for a self-employed loan but your income fluctuates, you might be eligible for a low doc loan. A low doc loan is a type of loan that requires minimal documentation and is ideal for people who may have trouble proving that they have a steady income.
In some cases, your lender may also take into consideration your fluctuating income, and assess your income over a period of a couple of years, instead of months. It can be very difficult for a self-employed business owner or a sole trader to be able to prove a stable income, but there are loan options available, and lenders who specialise in these types of situations.
How does a self-employed loan work?
A self-employed loan is a type of personal loan for people who are sole-traders or run their own business.
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. Usually, 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.
What is a low doc loan?
A low doc loan is a type of loan that can be taken out with less documentation than a full documentation loan. Low doc loans are commonly used by self-employed borrowers or anyone who might find it difficult to provide the ordinary amount of documentation.
These types of loans are normally offered to small business owners or freelancers. Designed for the self-employed, low doc loans are ideal for those who would not be able to show how much they earn using traditional documentation.
Low doc loans differ from regular loans in that different forms of documentation are necessary. With a normal loan, you may need hundreds of points of identification and years’ worth of bank statements and payslips. In the case of a low doc loan, minimal documentation is needed. While the exact type of documentation will vary depending on your lender, it will be a significantly less amount than if you had gone with a traditional, full documentation loan.
You may find that low doc loans are especially available through specialist lenders, or private lenders who specialise in low doc loans for those who are in need of them.
What kind of self-employed loans are there?
Generally, the application process may be a bit different for self-employed loans. Although they may be a little different, there are still plenty of options available to people who are self-employed. Some typical options available to those who are self-employed may include the following:
- Specialist loans – You may find that applying through a specialist, or private lender who provides personal loans for self-employed people is an easier way to get funded.
- Standard personal loans – You may be eligible to apply for a personal loan if you can meet the documentation requirements for employment and income.
- Low doc loans – If you cannot meet the document requirements for a personal loan, you may be able to apply for a low doc loan. These loans generally require far fewer documents compared to a traditional loan, which may make them easier to apply for.
What documents will I need to apply?
In most cases, the eligibility requirements from the lender to the lender will differ. Usually, though, you will be required to have an ABN. In most cases, you’ll need to still have a good credit history, as your lender needs to be sure that you can afford your loan repayments. However, you may also be asked to provide:
- Business Activity Statements – Generally, most lenders will need 12 months’ worth of statements. This is to help your lender decide whether or not you’re able to afford the loan given your profit and spending habits
- Self-verified income declaration- Instead of tax statements, you may be asked to provide 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 to be able to prove your earnings
- Previous bank statements – Depending on which lender you choose, they may ask 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. Firstly, you will have a free consultation with one of our specialists, and we will tailor-make you a loan. Then 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. It can be hard to get approval from traditional lenders due to their application criteria, which is wrong.
How we can help
Our finance specialists can help you find the right loan for your project. 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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