How to Get Self-Employed Personal Loans Without Hassle

When you’re self-employed, applying for a personal loan can be more challenging than when you earn a steady paycheck from an employer. You may need to provide additional proof of income, and how long you’ve been self-employed can also factor into loan approval. 

But you can still have a good shot at getting a personal loan for major expenses or large purchases. Here, you’ll find eligibility requirements, how to strengthen your loan application, and what to expect when applying for a personal loan if you’re a sole proprietor, freelancer, gig worker, or independent contractor.

Best lenders offering personal loans to self-employed borrowers 

Credible

Best Marketplace

5.0 _/5

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Why we picked it

Credible simplifies the loan process for self-employed borrowers by giving access to multiple lenders through one platform. This makes it easier to find lenders that understand the unique challenges of self-employment, though you’ll likely need to provide documentation like tax returns or proof of deposits to verify your income.

Loan details

Rates (APR)	6.94% – 35.99%
Loan amounts	$600 – $200,000
Repayment terms	1 – 10 years

SoFi

Best for Good Credit

5.0 _/5

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Why we picked it

SoFi is a top choice for self-employed borrowers with solid credit histories. Its application process accommodates independent contractors and sole proprietors, ensuring that your nontraditional income is taken into account. Be prepared to provide the prior two years’ 1040 and Schedule C profit and loss forms. 

Loan details

Rates (APR)	8.99% – 29.99%
Loan amounts	$5,000 – $100,000
Repayment terms	2 – 7 years

Upgrade

Best for Fair Credit

4.9 _/5

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Why we picked it

Upgrade caters to self-employed borrowers who might not have perfect credit but still need accessible funding. When you apply, expect to provide all pages of the prior two years’ tax forms, including forms 1040 and Schedule C, plus a bank statement showing income within the past 40 days. Income verification with the IRS may take three to five days.

Loan details

Rates (APR)	9.99% – 35.99%
Loan amounts	$1,000 – $50,000
Repayment terms	2 – 7 years

LightStream

Best for Excellent Credit

4.8 _/5

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Why we picked it

LightStream is a solid option for self-employed borrowers with strong income and excellent credit. Its documentation requirements may vary, and you’ll receive guidance on what’s needed after applying. 

However, LightStream doesn’t offer prequalification, so it’s important to ensure you meet its criteria before submitting an application. If you qualify, the process is straightforward, with no fees or unnecessary steps.

Loan details

Rates (APR)	6.94% – 25.29%
Loan amounts	$5,000 – $100,000
Repayment terms	2 – 12 years

What you need to know about personal loans if you’re self-employed

When you’re self-employed, taking out a personal loan has many of the same requirements as when you work for an employer. Depending on the lender, you must typically provide proof of income from a W2 or tax return from the prior year and have a qualifying credit score. Your income, current debt amount, and credit history also factor into loan approval.

However, self-employed people often have fluctuating incomes, so you’ll likely need to provide additional documentation showing consistent income, which may include:

• Tax returns and Schedule C profit and loss statements from the prior two years or longer 
• 1099 forms from the prior two years
• Recent ACH and other business income bank deposits
• Bank statements for prior months or years

How can I use a personal loan if I’m self-employed?

Unlike business loan funds, which must generally be used for operation, overhead, and other business expenses, you can typically use personal loan funds for non-business uses. For example, you may need a new car, consolidate debt or make a large purchase.

Challenges in securing personal loans when self-employed 

Self-employed borrowers may have to jump through more hoops when applying for a personal loan than if you worked for a traditional employer. But you can provide the required documentation and get approved despite a few challenges specific to self-employed borrowers.

Challenges in securing personal loans when you’re self-employed include:

• Income verification difficulties. When you work for an employer, it’s easy to prove how much you earn each month or annually by providing paycheck stubs, a W2, or last year’s 1040 form. However, self-employed folks often have to submit at least two years of income documentation in addition to other proof of income sources.
• Inconsistent cash flow. When you’re self-employed, you may experience periods of higher or lower income due to seasonal volume, losing or gaining customers, illness, a volatile economy, or other reasons. Lenders like to know you have a consistent income that hasn’t dropped significantly after you filed the prior year’s tax documents.
• Higher scrutiny from lenders. Self-employment is a risky endeavor, a fact that’s not lost on lenders who may worry that your business will fail or your income might take a nosedive, resulting in missed payments or default. As a result, lenders may ask for additional documentation of your business status, such as a copy of your business license or more details on your work.

How to strengthen your loan application 

As a self-employed person, you can take steps to strengthen your loan application for a better chance at approval. Below are five ways to make your loan application stronger as a self-employed borrower.

1. Prepare documents. Ask the lender what documents are required for your loan application, along with minimum income and credit score requirements. Then, gather all the required tax forms, profit and loss statements, bank statements, or other documents required for your loan application so you are organized and prepared.
2. Find out your credit score. Check your credit score so you know where your credit history stands. If you have a major credit card, you may be able to simply sign into your account to see your credit score. You can also sign up for a free or paid credit monitoring service to check your credit score anytime.
3. Review your credit report. Order a free copy of your credit report from AnnualCreditReport or one of the three major credit bureaus (Experian, Transunion, and Equifax). Review the report, looking for inaccurate information, such as incorrectly reported missed payments and inquiries into your credit from companies you didn’t apply with. When you find mistakes, contact the creditor and ask it to remove or correct the mistake.

3. Improve your credit score. Since your income may fluctuate, it’s important to make sure your credit score stays in good shape and constantly improves. Paying off as much debt as possible, making all payments on time, and not acquiring new debt can improve your credit score. Have an emergency savings of at least $1,000 with the goal of saving enough for six months’ expenses so you don’t miss credit card, mortgage, or other loan payments.
4. Consider a cosigner. If your credit score, income, or other factors may hurt loan approval, adding a cosigner with good credit may boost your chances of getting approved.

When clients are self-employed, I recommend staying on top of their bookkeeping each month. This allows them to produce up-to-date financial reports, making the tax preparation process smoother. Being organized at all times can also be helpful when applying for a loan. 

What to expect when you apply for a personal loan

Many aspects of getting a personal loan when you’re self-employed are similar to those you’d encounter as a personal loan applicant working for an employer. For example, you may be able to apply online and receive loan funds the next day or within a few days once approved. 

However, some lenders may take longer to approve a personal loan when you’re self-employed. 

As we mentioned, you’ll likely need to provide additional documentation of proof of income vs. what you’d submit if you weren’t self-employed. For example, SoFi requires self-employed borrowers to submit two years of filing Form 1040 tax returns and Schedule C profit and loss forms. Upgrade requires the same, plus bank statements from the past 40 days. 

FAQ

Will I pay higher interest rates because I’m self-employed?

Interest rates for self-employed borrowers depend on your credit score, income stability, and debt-to-income ratio. While rates might be higher for those with variable income, competitive rates are available for qualified applicants.

Can you get personal loans specifically for self-employed individuals?

While no personal loan is exclusively for self-employed borrowers, many lenders cater to this demographic by accepting alternative income verification and understanding fluctuating incomes.

Are there alternatives to personal loans for self-employed borrowers?

Yes, alternatives might include small business loans, lines of credit, and cash advances, depending on whether you need funds for personal or business expenses.

How we chose the best self-employed loans

Since 2017, LendEDU has evaluated personal loan companies to help readers find the best personal loans. Our latest analysis reviewed 1,029 data points from 49 lenders and financial institutions, with 21 data points collected from each. This information is gathered from company websites, online applications, public disclosures, customer reviews, and direct communication with company representatives.

These star ratings help us determine which companies are best for different situations. We don’t believe two companies can be the best for the same purpose, so we only show each best-for designation once.

Recap of the best personal loans for self-employed individuals