Self-Employed Personal Loans

Being self-employed can complicate your plans if you’re trying to get approved for a personal loan. Most lenders want proof of steady income to demonstrate that you can repay what you borrow. You might need to supply tax returns or bank statements to prove your ability to pay. 

Your choice of lender can make a difference when measuring approval odds. Several lenders offer self-employed personal loans to borrowers who work for themselves instead of a traditional employer. We’ll walk you through your borrowing options if you’re an independent contractor, gig worker, or small business owner. 

Best self-employed personal loans

Lender

Credible

LightStream

SoFi

Upgrade

We’ve identified one marketplace and four lenders that offer personal loans to self-employed borrowers. To get approved for a personal loan with self-employment income, you must meet a lender’s criteria, including any minimum credit score requirements. 

Lenders use credit scores to measure risk; the higher your score, the better your chances of being approved. A good credit score can also help you qualify for a lower rate. 

Most lenders use FICO credit scores, which range from 300 to 850. Here’s how to tell what kind of credit you have. 

• Excellent credit: 800+
• Very good credit: 740 – 799
• Good credit: 670 – 739
• Fair credit: 580 – 669
• Poor credit: Below 580

Checking your credit can give you an idea of which lenders might approve you for a personal loan.

Credible – Best marketplace

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LendEDU rating: 5.0 out of 5

• Offers a user-friendly platform for comparing multiple lenders.
• Provides personalized loan offers without affecting your credit score.
• No fee to use Credible’s service.

Credible stands out as the top marketplace for borrowers to compare loan offers from various lenders with just one application. Its platform is user-friendly, making it easy for users to navigate through different loan options, including personal loans, student loans, mortgages, and more. This ease of use, combined with the comprehensive selection of loans, secures its spot as a market leader.

One of the most appealing aspects of Credible is that it allows users to view personalized loan offers without a hard credit check, meaning it won’t affect your credit score to explore your options. This feature is beneficial for borrowers who want to understand their options without committing immediately. 

Coupled with its customer-friendly support and educational resources, Credible ensures that users are well-informed and comfortable throughout the loan comparison process.

LightStream: Best for excellent credit

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LendEDU rating: 4.8 out of 5

• Offers competitive rates for borrowers with strong credit histories.
• Provides a loan experience guarantee, ensuring customer satisfaction.
• Features a simple, online application process with no fees or prepayment penalties.

LightStream is the go-to lender for individuals with excellent credit, offering some of the most competitive interest rates in the market. It promises a superior borrowing experience or your money back. This focus on customer satisfaction, along with competitive rates, makes LightStream an attractive option for creditworthy borrowers.

The application process is straightforward, and you can complete it online, saving time and hassle. LightStream doesn’t charge any fees or prepayment penalties, which underscores its borrower-friendly approach. These factors, combined with the ability to fund loans as soon as the same day, make LightStream a top choice for borrowers seeking efficient and cost-effective loan options.

SoFi – Best for good credit

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LendEDU rating: 5.0 out of 5

• Competitive rates and terms for borrowers with good credit.
• No fees on loans, enhancing affordability for borrowers.
• Quick funding.

SoFi is the ideal lender for individuals with good credit. It offers competitive rates and favorable terms. The absence of loan fees—no origination fees, prepayment penalties, or late fees—makes SoFi attractive from a cost perspective. 

Its commitment to supporting its members’ financial journeys, combined with its straightforward online application process and quick funding times, ensures a seamless and supportive borrowing experience.

Upgrade – Best for fair credit

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LendEDU rating: 4.9 out of 5

• Specializes in accessible loans for borrowers with fair credit.
• Competitive rates with a quick and transparent application process.
• Credit health tools and resources to help borrowers improve their credit scores.

Upgrade is the premier lender for individuals with fair credit, offering accessible and reasonably priced loan options for those who may not qualify with other lenders. Its dedication to transparency throughout the application process ensures that borrowers understand their loan terms, fees, and repayment options.

Beyond merely providing loans, Upgrade distinguishes itself with a commitment to helping borrowers improve their financial health. Through credit health tools and educational resources, Upgrade supports its customers in understanding and enhancing their credit scores. 

This educational approach, combined with competitive rates and a user-friendly online platform, makes Upgrade a top choice for borrowers looking to finance their needs while also working on their credit health.

How to qualify for a personal loan if you’re self-employed 

When applying for most types of personal loans, lenders can look at your credit score, income, and debt-to-income ratio (DTI) to determine whether to approve you. In that sense, it isn’t much different from applying for a personal loan if you work a traditional job. The main difference lies in how the lender assesses risk. 

Lenders’ main concerns are whether you have enough money coming in to make monthly loan payments and how reliable your income is. The minimum income required for a personal loan can vary by lender. A good credit score, meanwhile, suggests you’re diligent about paying bills on time. 

Lenders may ask for certain documents to prove how much you make and how often you earn income. You might need any or all of the following to complete the loan application:

• Tax returns for the past two years showing self-employment income
• Bank statements showing regular deposits of income from self-employment
• Profit-and-loss statement showing how much of your business income you get to keep after deducting expenses

What if you can’t qualify for a self-employed personal loan on your own?

If you have less-than-perfect credit or haven’t been self-employed for long, you might need to bring a cosigner or co-borrower on board. A cosigner reduces the lender’s risk because it can hold the cosigner responsible for the debt if you don’t pay. You could also qualify for a better rate if your cosigner or co-borrower has good, very good, or excellent credit. 

A secured personal loan is also an option if you can’t find someone to cosign and have an item of value you could offer as collateral. Secured personal loans may charge lower rates because they mean less risk for the lender. Keep in mind that if you fail to repay the loan, the lender can keep your collateral. 

How to apply for a self-employed personal loan 

Applying for a personal loan when self-employed starts with comparing lenders to understand the minimum criteria you’ll need to qualify and the type of loan terms you might qualify for. 

Getting rate quotes from at least three lenders that offer self-employed personal loans can help you narrow down which ones you want to apply with. 

Here’s an overview of how the process works when you’re ready to apply. 

1. Get preapproved. Preapproval is a chance to see what kind of loan terms you might qualify for, including the amount you can borrow and the interest rate. Look for a lender that offers preapproval in minutes, with no hard credit check required. 
2. Organize your documents. Preparing your documents beforehand can save time. Remember, you’ll need proof of income and bank statements, along with a valid, government-issued ID. This step could take 30 minutes to an hour if you need to put together a profit-and-loss statement for your business. 
3. Choose a lender. If you’ve compared the options and know what kind of loan you need, choosing a lender shouldn’t take long. 
4. Apply. Completing a personal loan application online may take 10 minutes or less if you have your documents prepared or already got a preapproval quote. Take a minute to review your loan application before submitting it to check for errors. 
5. Wait for approval. Some lenders offer near-instant approval for personal loans, while others may take several business days to respond. During this time, you may need to provide additional information to process your application. 
6. Sign and get funded. If you’re approved, the last steps are signing the loan documents and getting the funds. Your lender will need your bank account number and routing number to deposit the money unless you’re opting for a paper check instead. 

How to choose your self-employed personal loan

The best personal loan for you is one that allows you to borrow what you need at a rate you’re comfortable with and that you have the best chance of being approved for. Finding the right loan starts with shopping around to compare lenders. 

Here are helpful questions to ask when choosing a loan.

• What is the minimum and maximum you can borrow?
• Does the lender charge an origination fee or other fees?
• What are the minimum credit score and income requirements?
• How do loan rates compare to other lenders?
• Does the lender offer the flexibility to choose a loan repayment term that works for you? 
• Does the lender require any special paperwork or documentation from self-employed borrowers as proof of income? 
• Does the lender restrict what you can use the loan for?
• How long does approval and loan funding take? 
• Does the lender offer special benefits, such as an interest rate discount for automatic payments? 

Whether it makes sense to ask someone to cosign can depend on your credit score and income. A cosigner could make your application stronger, though not all personal loan lenders allow them. Keep in mind that if you fail to repay the loan, you could damage your credit as well as your cosigner’s. 

A personal loan calculator can help you estimate your monthly payments with different loan terms. Choosing a longer loan term can result in a lower payment but means paying more interest overall. A shorter term can save money on interest but raise your payments. 

Alternatives to self-employed personal loans

Personal loans aren’t your only option to borrow funds. Consider the alternatives below before you decide which is the best for you.

Home equity loan

Home equity loans can offer lower interest rates than personal loans because they use your home as collateral, reducing the lender’s risk. However, defaulting on payments could put your home at risk of foreclosure.

Home equity line of credit (HELOC)

A HELOC is similar to a home equity loan, but instead of a lump sum, you have access to a revolving credit line. This offers flexibility a fixed loan can’t provide.

Credit card

Credit cards can provide immediate access to funds, often at higher interest rates than personal loans. They might be beneficial for covering smaller expenses but can lead to high interest charges if balances aren’t paid off each month.

Savings or cash

Using savings or cash prevents accruing interest expenses associated with a loan. However, it can deplete your emergency fund and leave you vulnerable to unexpected expenses.

Self-employed personal loans FAQ 

How long does it take to get approved for a self-employed personal loan?

The approval process for self-employed personal loans varies by lender. It can be as quick as a few hours or as long as a few weeks. The time frame depends on the borrower’s ability to provide necessary documentation demonstrating their income stability.

Can you get a self-employed personal loan with bad credit?

Yes, some lenders cater to borrowers with bad credit. However, the interest rate may be higher, and other requirements, such as a minimum income limit, may be stricter.