No matter how much you earn when you’re self-employed, it can be cumbersome to qualify for a personal loan. Many lenders want to see pay stubs to verify your income, but this isn’t always possible if you’re bringing in revenue from clients or product sales.
Learn how to navigate personal loans when self-employed so you can access the funds you need.
Follow these steps to find the best self-employed personal loan for you.
- Compare lenders and income requirements. Each lender has its own income minimums and verification processes for applicants. In addition to comparing loan amounts and interest rates, look at how they assess income. Some lenders offer low-income loans, while others do not.
- Choose the best fit. Use your research to prioritize which lenders offer the best personal loan options so you can move forward. Start with your favorite pick, then move on to the next one if you’re not approved.
- Fill out the loan application. Most lenders have an easy online application process. Gather all your financial documents ahead of time, such as your tax returns and recent bank statements.
- Receive your funds. Once approved, you’ll likely have your funds deposited directly into your personal or business bank account. It can take anywhere from a business day to a week or two, depending on the lender.
Many lenders have income requirements that can be hard to fulfill. For instance, you might have to show a minimum annual amount or have been self-employed for at least one year. If you can’t meet those requirements, consider applying with a cosigner to help you qualify.
Related: Learn more about getting a personal loan on Credible.com
Plenty of loan options exist for self-employed people. Here’s an overview of several lenders who specifically offer personal loans for this demographic.
| Lender | Rate range | Loan amount | Terms | Proof of income |
|---|---|---|---|---|
| Avant | 9.95% to 35.95% APR | $2,000 to $35,000 | 12 to 60 months | Last 2 years of tax returns |
| Axos Bank | 7.99% to 14.99% APR | $2,000 to $50,000 | 3 to 6 years | Most recent tax return and bank statement |
| Best Egg | 8.99% to 35.99% | $2,000 to $50,000 | 36 to 60 months | Connects to bank account |
| Discover | 6.99% to 24.99% APR | $2,500 to $35,000 | 36 to 84 months | Bank statements |
| Happy Money | 7.99% to 29.99% APR | $5,000 to $40,000 | 24 to 60 months | Your most recent tax information (i.e. Form 1040, Schedule C or K1, etc.) 3 months of bank statements |
| LendingClub | 8.30% to 36.00% APR | $1,000 to $40,000 | 24 to 60 months | Recent tax return |
| LendingPoint | 7.99% APR to 35.99% APR | $2,000 to $36,500 | 24 to 72 months | Check with lender |
| Marcus | 6.99% APR to 24.99% APR | $3,500 to $40,000 | 36 to 72 months | Tax transcripts and bank statements |
| Prosper | 6.99% APR to 35.99% APR | $2,000 to $50,000 | 24 to 60 months | Tax returns and bank statements |
| SoFi | 7.99% APR to 23.43% APR | $5,000 to $100,000 | 2 to 7 years | Varies depending on incorporation type |
| Upgrade | 7.96% APR to 35.97% APR | $1,000 to $50,000 | 2 to 7 years | Two years of tax returns |
| Upstart | 6.5% APR to 35.99% APR | $1,000 to $50,000 | 3 or 5 years | Last year’s tax return plus proof of recent income |
Self-employed individuals can take advantage of Avant’s personal loans. The proof of income requirements include submitting your last two years of tax returns from the IRS. You can also submit copies of your Tax Return Transcript, which you can request from the IRS.
Axos Bank requires you to include your most recent tax return and bank statements as part of the income verification process.
Best Egg uses technology to analyze and verify your income by securely connecting to your bank accounts.
According to Discover, the lender reviews bank statements to verify income. Discover sometimes uses a third-party vendor as well for this process.
Expect to submit a few different types of documentation if you’re a self-employed borrower with Happy Money as your lender. You’ll need your most recent tax return and the last three months of bank statements from all of your personal accounts.
LendingClub requires self-employed and freelancer applicants to submit their most recent tax returns.
LendingPoint requires all applicants to verify their income, but doesn’t outline specific documentation for self-employed workers. Reach out directly to the lender before or during the application to find out what you’ll need to submit.
Marcus offers personal loans for a variety of purposes, including debt consolidation, home improvement, and more. The lender uses a few different types of financial documents to verify income. As a self-employed applicant, you’ll likely be asked to submit tax transcripts and personal bank statements.
The income verification process for Prosper may include submitting tax returns and bank statements.
In general, SoFi requires you to submit the previous two years’ tax returns during the loan application process. But the forms you need vary depending on your incorporation status. Sole proprietors and independent contractors, for instance, must submit the Schedule C form. If you’re in a partnership, you need to supply your Schedule K-1 from Form 1065.
Upgrade requires self-employed applicants to submit their full tax returns from the previous two years. You’ll also need to show a recent bank statement within the last 40 days indicating you’ve received income.
If you’re a sole proprietor or in a business partnership, you’ll need to provide Upstart with last year’s tax return. Additionally, you’ll need to show you’ve recently received income, such as a digital deposited check image or a business invoice that matches a deposit in your bank account.
The process of applying for a personal loan when you’re self-employed is similar to what you’d experience if you were an employee. The difference comes when it’s time to verify your income. Whether you want a personal loan to start a business or for other purposes, here’s your checklist:
- Check your credit score. Knowing your credit score helps you gauge what type of interest rate you’ll qualify for. Many banks and credit cards offer credit-score reporting for free with your account.
- Get prequalified. Most lenders let you prequalify for a loan to get an estimate of how much you could borrow and what your monthly payments would look like. Protect your credit score by only choosing lenders who do a soft credit pull at this stage.
- Choose a lender. Once you’ve compared options, it’s time to pick a lender. Consider how much you’re able to borrow, lender fees, and interest rates. For instance, borrowers who are approved for a $30,000 personal loan with one lender may be approved for a different amount elsewhere.
- Complete the application. Now it’s time to fill out the application. Online lenders typically have fast forms that make this relatively easy.
- Submit your income verification documents. Typically, when you’re self-employed, you need to supply additional information to demonstrate you earn enough to be able to repay the loan. In most cases, you’ll need one or two years’ of tax returns and potentially some recent bank statements.
- Get your loan funds. Once your application is approved, the funds will be on their way to your bank account.
A lender may ask to verify your income in a variety of ways when you own your business.
Not sure if you’ll qualify for a personal loan? Explore these alternatives that are also solid options for self-employed borrowers.
Some credit cards offer new customers an introductory rate on new purchases within a certain time frame. As long as you make minimum payments on time, you won’t accrue interest until the introductory period ends.
Home equity loans can be an affordable way to borrow money as either an installment loan or a line of credit. Also known as a second mortgage, home equity loans are secured by your property. Home equity loans keep rates competitive, which can save you money in the long run. But it’s crucial that you stay current on your loan payments to protect your collateral.
If you’re self-employed, you may qualify for a business loan. You’re restricted in how you use the money, as it’s for business purposes only. Most business lenders look at your revenue, time in business, and personal and business credit history.
A business cash advance is another way to finance business expenses. The funds are borrowed against future revenue. Usually, you repay the lender as a percentage of sales until the balance — plus fees — is repaid.
Related: Learn more about getting a personal loan on Credible.com