9 Personal Loans To Consider When You're Self-Employed

A common requirement when applying for a personal loan is proof of income. This could be a challenge if you’re self-employed, especially if your income is irregular or difficult to prove.

However, there are several lenders willing to work with self-employed borrowers that offer other paths to approval besides a typical pay stub or W-2, such as tax returns and invoices, or that allow borrowers to attach a cosigner or collateral to the loan. Approval will be easiest if you have good to excellent credit. For example, the average APR for borrowers with a FICO score of 720 to 779 was 16.59% in November 2023, according to Credible data on three-year loans.

Here’s what you should know about personal loans for self-employed borrowers:

9 lenders that work with self-employed borrowers

While some lenders don’t offer personal loans to self-employed borrowers, there are several that do. Here are several Credible partners that provide personal loans for the self-employed:

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Avant

If you're self-employed, Avant requires that you submit your two most recent years’ complete, official tax documentation.

Axos Bank

Self-employed borrowers will need to provide their tax returns from the two most recent years to prove their income.

Best Egg

Best Egg works with borrowers who have a variety of employment statuses, such as salaried, self-employed, or retired.

Be sure to check with Best Egg to see what documentation you’ll need to provide.

Discover

Self-employed borrowers will need to provide their two most recent years’ worth of tax returns to prove their income.

Happy Money

Self-employed borrowers will need to submit the first two pages of IRS Form 1040 along with the first two pages of either the Schedule C or K1 form.

LendingClub

If you’re self-employed, you’ll need to submit a recent tax return or other forms like a 1099 as proof of income.

SoFi

To potentially qualify for a loan, self-employed borrowers will generally need to show proof of consistent income through tax returns or bank statements.

In addition to income, SoFi will also consider your credit score, and education level.

Upgrade

To apply, self-employed borrowers must provide their two most recent tax returns.

Upstart

If you’re self-employed, you’ll need to submit the previous year’s full tax return plus proof of recent income in the form of a digitally deposited check image or a business invoice.

Learn More: Where to Get a Personal Loan

Consider a cosigner

If you’re just starting out as being self-employed, then providing the commonly required two years’ worth of tax returns might be difficult.

In this case, applying for a personal loan with a cosigner could be a good option. Not all lenders allow you to apply with a cosigner, but some do.

Before you borrow, be sure to consider multiple lenders. This way, you can more easily find a loan with a good rate as well as favorable terms.

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How to get a personal loan when you’re self-employed

If you’re ready to take out a personal loan, follow these four steps:

1. Shop around and compare lenders: Research and compare as many personal loan lenders as possible to find the right loan for you. Consider not only interest rates but also repayment terms, any fees charged by the lender, and requirements for self-employed borrowers. Also remember to check if the lender accepts cosigners, as having one might help you get approved if you’re having trouble proving your income.
2. Choose your loan option: After comparing lenders, choose the loan option that best suits your needs.
3. Complete the application: Once you’ve picked a lender, you’ll need to fill out a full application and submit any required documentation, such as tax returns or bank statements.
4. Get your funds: If you’re approved, the lender will have you sign for the loan so your money can be sent to you. The time to fund for a personal loan is typically about one week — though some lenders offer fast personal loans that are funded as soon as the same or next business day after approval.

You typically need good to excellent credit to qualify for a personal loan. While some lenders offer personal loans for bad credit, these loans typically come with higher interest rates than good-credit loans.

If you’re struggling to get approved because of your credit, applying with a cosigner could improve your chances. Having a cosigner with a good score might also qualify you for a better interest rate than you’d get on your own.

Before you get a personal loan, it’s important to consider how much that loan will cost you over time. This way, you can be prepared for any added expenses. You can estimate how much you’ll pay for a loan using our personal loan calculator.

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Learn More: How to Get a Personal Loan With a 600 Credit Score

Other ways to prove income

While traditionally employed borrowers can typically provide a pay stub or W-2 to prove their income, you might need to rely on other types of documentation if you’re self-employed, such as:

• Tax statements: Providing your previous year’s tax return can help you show how much income you earn annually. If you don’t have a copy, you can check with your tax preparer, tax software provider, or the IRS.
• Bank statements: If you have income regularly deposited into your bank account, then you might be able to use bank statements as proof of income. You can typically get copies of past statements by visiting your bank or by downloading them from your online account.
• Business ledgers: If you own a small business, lenders might ask to see your business’s ledgers as proof of income. You might need to download or print several months’ worth of ledger entries to share with your lender — be sure to check with them to see exactly what you need to provide.
• Social Security or other government benefits: If you’re receiving government benefits like Social Security, these benefits could act as proof of regular income, even if you’re also self-employed. You can generally get a benefit verification letter from the appropriate government website, such as the Social Security website. You might also be able to request a verification letter by calling or visiting the government agency.
• Court-ordered agreements: If you receive alimony or child support, this could also be used as proof of income. You might need to share the court order with your borrower, along with proof of receipt of several months’ worth of benefits. Be sure to check with the lender to see what their exact requirements are.

Alternatives to personal loans

Personal loans aren’t the only way for self-employed individuals to borrow money. Here are a few other options to consider:

• Use a credit card: A credit card might be a good choice if you need to cover small or ongoing expenses, as you can repeatedly draw on and pay off your credit line. Some cards come with a 0% APR introductory period, which means you could avoid paying interest if you repay your balance by the end of the period. However, if you can’t pay off your card in time, you could get stuck with some hefty interest charges.
• Tap into your home’s equity: If you own your home, you might be able to access your home’s equity through a home equity loan or home equity line of credit (HELOC). While these loans typically have lower interest rates than personal loans, keep in mind that you risk losing your house if you can’t make your payments.
• Take out a secured personal loan: While most personal loans are unsecured (meaning you don’t have to provide collateral), a secured personal loan requires collateral, such as a car, jewelry, or other item of value. Because there’s less risk to the lender, you might have an easier time qualifying for this type of personal loan if you’re self-employed. Just remember that if you can’t keep up with your payments, you could lose your collateral.

If you decide to take out an unsecured personal loan, remember to consider multiple lenders to find a loan that works for you.

Related: Personal Loan vs. 0% APR Credit Card

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