Many people are self-employed now, and the number is increasing every day. A lot of them are in traditional work, such as doctors, and lawyers. But there is also a new generation of self-employed people like accountants, software professionals and writers, for instance. So what happens to a self-employed person if he needs a loan, particularly if the person has poor credit?
Traditionally, payday loans have been denied to such people because they do not have a stable source of income. The up and down cash flow was deemed as too uncertain. But that is changing. Many lenders are realizing that, just like others, self-employed people too need a cash advance, and they too cannot afford the time traditional lenders will take to process and approve the loan. In an emergency, a payday loan remains the only practical option for the self-employed people.
Plus, banks have been traditionally unwilling to offer a loan to self-employed people, particularly if the person is in the first year of going independent. Many banks may regard working for yourself as a risk, even if you are making decent money, and are thus unwilling to offer a loan to self-employed people. To them, being self-employed is like being just a step away from becoming unemployed.
The good news is, now you can get a payday loan, even if you are your own boss. You can be a contract worker or have your own business. It doesn’t matter. You have a far better chance of getting a payday loan now.
Payday Loans for the Self-Employed
It works in much the same way as a loan for people doing a traditional job. The advance is for a few weeks, just like it is for the employed, and the loan amount varies between $500 and $1000 usually. This emergency cash will cover you till the time you receive money from your client and repay your debt. It is a perfect solution.
In fact, the lending agency may not even look at whether you are traditionally or self-employed. The lender will just see whether you have the ability to pay it back in time.
Here is a good way of getting money quickly, even if you are self-employed.
Are You Eligible for a Short-Term Payday Loan If You Are Self-Employed?
Short term lending agencies are more flexible than banks and other traditional lenders. It is not mandatory that you have a regular full-time job. However, to get the approval, you do have to show regular income. You will be asked to provide a bank statement for the last 90 days. This works to your advantage because you can surely show income in 90 days, even if your clients did not pay you last month. Sometimes, the lending company may even ask for additional documents so that they can verify your income because as a self-employed, you obviously cannot furnish a pay slip.
As mentioned earlier, the loan is usually between $500 and $1000. But you can take less than $500 too if you so want, and in some instances, payday lenders will even approve an advance of more than $1000. The term is usually for a few weeks. In some rare instances, however, you can ask for a longer term as well. There are many lenders that will agree with you to work out the repayment terms.
Of course, how much loan money will be approved and the lending term is always going to be subjective. It may depend on how much you have earned in the last 90 days, and the policies of the payday lending business.
Payday Loans for Business
Often, a business too will be a little short of cash. Perhaps an urgent payment has come up, and you have to meet the commitment. Or maybe, you have to accept a consignment in exchange of money. Or perhaps, you have to carry out some minor repairs. A payday loan in perfect in these situations because you get the money quickly. The repayment period is short as well, so your business is not in debt for the long-term. But remember, these are small dollar loans, so you cannot make large investments or pay off another debt with the money you receive.
You can get a payday loan for your business too, as long as the business is registered in the United States. You might have to furnish additional details of your business, such as your line of trade, and an income statement for the last three months, just like the loans issued to those who are self-employed.
There was a time when business owners had to approach traditional lenders only for their credit requirements. Not anymore! Many payday lending companies too are now offering loans to businesses.
According to a report published by the Federal Reserve in March, 7 percent of small businesses owners in 26 states of the country applied for a cash advance last year. This trend seems to be growing now. It was the maximum in Florida, as almost 18 percent of businesses there approached for a cash advance.
Self-Certified Loans for the Self-Employed
There are some self-employed people who are tempted to apply for a self-certified loan. In this, you don’t have to show proof of your income. There is no verification as well. As the name suggests, you just have to make a declaration that you earned X amount of money in Y time, which is usually a month or three months.
These are the easiest loans to get, obviously, but you will make a huge mistake if you apply for these loans. That’s because, the risk is very high here. The interest and fees are very steep. Typically, self-certified loans are issued by loan sharks.
Stay away from these loans. Go for a payday loan instead, as the terms are almost always friendlier for those who are self-employed or have their own business.
Salient Features of Payday Loans for the Self-Employed
1. You can borrow anything between $300 and $1000. In some rare instances, you can borrow even more.
2. The term for these short-duration loans is usually for a maximum of three weeks. There can be penalties if you fail to repay on the due date. However, you can re-negotiate for an extension. Many lenders will agree because they want to help you repay the debt.
3. There is a restriction on how much can be charged from you towards the interest and fees. Agencies are looking at this all the time. You can make a complaint if you believe you are being over-charged.
4. You can approach a lender for a payday loan even if you have bad credit. This is not a factor. They are not going to carry out a credit check to approve the request.
5. You can get the money usually within 1-2 business days, sometimes even on the same day. The money is deposited directly into your bank account.
6. The application and approval process is easy, quick, and hassle-free.
So you see, a payday loan for the self-employed works in much the same way as it works for those who are salaried. The lenders won’t overcharge just because you are not drawing a regular salary. It is often the only way for the self-employed to get a loan quickly when they are in urgent need of credit.
Thank you for visiting our website. Hope we helped you get a loan.