Sunday, September 8, 2019

Requirements For a Self-Employed Loan

Photo by Alexander Mils on Unsplash

People had lots of reasons why they would want to have a loan. If you’re self-employed, it’s mostly because you want to grow your business or simply because you need more money to cover your expenses.

If you were to apply for a loan in Social Security Service or in SSS, it would be easier to check if you’re eligible. You can simply log into their website, click “E-services”, then click “Apply for a Salary Loan,” which is the quickest loan a working individual could get. Right then and there, the website will check if you’re eligible for a loan or not. I just checked mine and it seems I’m not yet eligible for a loan because I haven’t completed a contribution of 6 consecutive months within the 12-month period. I completely understand this because I just started contributing 2 months ago as an voluntary member.

It’s a completely different process for banks or other financial institutions for self employed loans. According to CEO World , if you’re self-employed, banks would usually require 1-2 years of being self-employed and you need to submit to them the proof that you are. Lenders require personal and/or business bank statements with 12-24 months of deposits.  

Aside from bank statements, you would also need a good credit score. iMoney suggests that you get a good credit score if you have a good credit history. Having a good credit history, to summarize it, means if you had an approved loan before and you made sure to pay on time and keep your debts low, then you surely have a good score. Of course, missing a payment is sometimes unavoidable, so all you have to do is catch up and try not to miss a payment again. If a lender saw this in your credit report, explain to them that you underwent a bad time and you provide them with proof. It might increase your chances of getting your loan approved. iMoney also mentioned that having a good credit score isn’t a quick fix. You’ll need to be consistent, and to keep up your good credit behavior over many years.

Another common requirement that a lender would require you is asset documentation. Self-employed individuals need asset documentation to qualify for bank statement loans. Lenders would also want to know how you can pay them back once you don’t have any cash in your bank account. Your assets such as your bank assets (savings account, checking account, money market, certificate of deposits, etc.), motor vehicle assets, real estate assets, insurance policies, and even burial documents are included in your list of assets which the lender would review. Lenders want proof that you use finances from a quality source to put money down.

No matter what your reason is, having a bank loan (no matter what type) is a risk for both the lender and the borrower, and we really can’t blame the lenders if they want to fully check your financial credibility because in the end, they’re the ones who would suffer. As a responsible borrower and an individual, we do our best to pay them on time and be transparent with the lenders to prevent bigger problems.

If you have questions or concerns, let me know through the comments below. 

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