5 Tips for Loan Approval When you are Self Employed

Regardless if you work for a company or yourself, there may be a time when you need a financial boost. Unforeseen circumstances or an expense which has caught you off guard may come at the most inconvenient time.

With different circumstances and requirements come a variety of different amounts which you need to borrow. From an emergency which would be covered by $300 or car trouble that could potentially set you back over $1000, there are lenders which specialize in providing short term cash injections to those most in need. The most common of these companies aim to provide solutions for online installment loans from direct lenders, in a quick and direct fashion.

Sometimes requirements dictate that you need to borrow a higher amount, and over a longer period of time. Or maybe you are looking to secure a mortgage, but are worried that your status as a self-employed worker could play against you. In order to prepare for a loan of this kind of loan, the tips below may help you:

Find out the criteria for the lender you are approaching

Despite a significant number of small businesses surviving past their first year, it is approximated that 4 in 10 won’t see out their second. For this reason, many banks are reluctant to lend to businesses which have not proved their staying power past this time. As a self-employed applicant, issues such as this can work against you.

Ensure your credit history is in good shape

This goes without saying. Whether you are applying for a personal or business loan, a lender will want assurances that you are credit worthy before agreeing to lend. If you are planning on applying for a loan, tie up any loose ends and, if possible, pay off any outstanding debt. As business and personal credit scores are, for the most part independent of one another, focus on what type of loan you are going for and act accordingly.

Be prepared to provide comprehensive paperwork

When you are self-employed, you will be required to provide a wealth of information relating to business accounts, expenditure, profit, and other details pertinent to the company’s performance if you are applying for a business loan. Having your paperwork in order, therefore, is a sure sign to indicate how serious you are and your trustworthiness in the eyes of a lender. If you can clearly demonstrate that your business is a worthy investment, and that it is handled as it should be, you will certainly stand a better chance.

Know what you need and show that you have the means to pay it back

Perhaps the most simple of them all, but definitely the most important. If you are unsure of what you need, how will a lender respond? Make sure you are prepared to justify why you need each and every dollar. If you enter a meeting with a lender having no clarity on why you need the money, or what you’re going to do with it, you may find your application swiftly declined.

 

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