Individuals who are self-employed can apply for a loan if they can demonstrate that they have sufficient earnings and can meet lender requirements.


Do Lenders Offer Loans to Individuals Who Are Self-Employed?

Although options for loans may be more limited for individuals who are self-employed, usually if they have a good credit history, can meet lender requirements and can provide the necessary documents, there should be no reason why they cannot get a loan. Typically, lenders will scrutinise your finances to ensure that you earn enough income to meet payments.


How Long Do You Need To Have Been Self-Employed To Get a Loan?

The majority of major loan companies will require a minimum of two years of self-employment history in order to qualify for a loan. However, there is flexibility within this and it will depend on the loan provider.




Sometimes, you will be able to get approved with just one year of self-employment history as long as you can show proof of employment before that in a related field with a similar or greater income.


How Can You Apply for a Loan if You Are Self-Employed?

If you are self-employed, you will typically need to take more steps in order to demonstrate that you are financially viable enough to meet loan repayments.

Prepare your financial documents – as a self-employed individual, you will need to keep reliable records and be highly organised when it comes to your financial documents, most likely including bank statements. If you are providing financial documents for a limited company, you will probably need to collect payslips to show how much you are paid in dividends monthly.

Check eligibility – the majority of lenders will give you the offer to check your loan eligibility up-front with no impact on your credit score. These are a great way to rule out any loans you are ineligible for before taking the first steps in the loan application and focus your attention on ones for which you are more eligible.

Carry out a loan comparison – comparing loans is the best option for finding the best deal that is tailored to your personal circumstances. Working with a loan comparison service or website can broaden the range of loan options available.


How Can You Prove Income if You Are Self-Employed?

Between lenders, there will be different lending criteria and different documents that will need to be provided. Typically, the following types of documents that can be used to prove income if you are self-employed:

  • Proof of ID: this will usually need to be a photo ID such as a passport or a driver’s license.
  • Proof of address: documents showing your address such as utility bills or council taxes are usually accepted by lenders.
  • Tax returns: if you are self-employed, you will need to self-file after you have submitted your tax returns. this can be done online via HMRC and you will need to download your SA302 and present this for the last two years to prove past income.
  • Bank statements: lenders will normally ask to see your bank statements in order to verify the earnings shown by your SA302 calculation. Along with your bank statements, you will need to provide any mortgage documents or lease / tenancy agreements.


What Loans Can I Apply for if I’m Self-Employed?

There are many different types of loans you can apply for as a self-employed individual. The loan you choose will largely depend on your personal circumstances, how much you want to borrow, for how long, and the purpose of your loan.




  • Secured loans: this type of loan allows you to put forward equity or collateral as security for the loan meaning that the agreement is less risky for the lender. Due to the lower-risk nature of the loan, secured loans generally offer lower rates of interest.
  • Personal loans: these loans can be applied for without the need to secure it against any personal assets. However, you will typically need to demonstrate a good credit record if you want to apply for a self-employed personal loan.
  • Guarantor loans: if you are struggling to get a loan by yourself, there is always the option of a guarantor loan. This is when a friend or relative with a good credit record acts as a “guarantor” meaning that they are agreeing to pay should you default the loan payment.
  • Business loans: depending on your set-up, you may also be eligible for a business loan. These loans are used to secure funds to support your business and lenders will typically need to check your business accounts before approving any loans.


Are Loans More Expensive if You Are Self-Employed?

Generally speaking, if you are applying for a self-employed loan but have a good credit record, can meet lender requirements and can support your financial status with the requested documents, the rates for a loan should be the same as any standard loan.