It is difficult for self-employed people to get a loan from a bank or other credit provider, as there are stricter qualification criteria that apply to them. Most banks see self-employed people at a higher risk is why they are reluctant to borrow the money. If you are self-employed, you are seen as someone with a secure income unfortunately, this counts against you.
What You Need
The most important part of applying for loans for self-employed people is that you look good on paper. As a self-employed individual, you will start the process trying to convince the financial institution that you are not a high security risk after all. For this to happen, you will have to supply quite a bit in terms of financial statements and proof of your income and overall stability.
Paperwork that you should get together before even starting your application will include the following:
- Bank statements for the last six months – for your business and personal accounts
- A letter from your accountant confirming your income and gross profit for the past year
- Proof of your income and expenses for the last three months
- Identity document
- Latest income tax certificate
- Three month utility bill
It is unlikely that you will be asked to provide more than the documents outlined above but this could vary depending on the financial institution you approach for a bond. The best you can do is present a well-prepared case as to why you should be considered in a positive light.
A great way to prepare for a meeting with your bank is to speak to professionals in the industry or bond advisors who can help guide you through the process. This will greatly reduce the amount of stress and pressure you might feel and it will also help in your preparation.