Payday Loans for self-employed Workers

Payday Loans for self-employed Workers
Stacey Corrin
payday loans for self employed

Payday loans for self-employed are not always easy to come by. It’s much easier for lenders to approve customers with a steady income working a large, well known company than someone who is self employed. 

When searching for short term loans online or trying to get a quick loan for emergencies, you may have a limited choice. Especially if you self-employed. Many lenders see self-employment as a risk factor.

People that work for themselves often have fluctuating incomes. They also, may not seem to have stable employment.

Many of the self-employed find they don’t meet a lender’s basic requirements. Or, that they cannot get a payday loan approved.

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But, Can I Get a Payday Loan if I am Self-employed?

If you are self-employed and looking for same day cash, you may have fewer options. Yet a short term loan can still be an option for you.

Here are our tips for applying for a short term loan in the UK.

Check the lender’s requirements

Your time is a waste if you spend it on applications that have no hope of getting approval. It is worth considering that all lenders have their own minimum requirements.

One lender may require that borrowers are in employment. They may also ask for employment details with evidence of income. Another lender may not need such detailed information

The lender’s minimum requirements are only a starting point. You will still need to go through affordability assessments before a final decision.

Consider a guarantor loan

Payday Loans for self-employed Workers

Your friends and family members could help you to get a loan.

Guarantor loans are those backed by someone you know. Your guarantor agrees that if you cannot repay your loan, they will make payments on your behalf.

Guarantor loans are not for everyone. You need to be able to discuss your need for a loan with a family member or friend.

You should feel confident that you can repay your debt so that you do not damage the relationship.

Your guarantor should have a good credit rating. Ideally, to maximise your chance of approval, they will be a homeowner. Someone that knows you well could be willing to back your loan because they know that you have a steady income.

If you have someone that can act as your guarantor, you may be able to get a short-term loan when self-employed. Many guarantor loans have lower interest rates, to reflect the lower level of risk for the lender.

Connect your loan application with your bank accountConnect your loan application with your bank account

Some lenders now link to your bank account.

You can provide read-only access to your online banking. This enables lenders to see your bank balance and statements. The lender cannot make any changes.

This could help your search for a self-employed payday loan much easier. Lenders may be able to trust you more, if they can see a regular income and that you are not overspending.

These loans may also provide more financial security. Lenders will not attempt to take a repayment if the money is not available in your bank account.

For example, you may find your client or customer pays their invoice late. In this situation, you will not have any bank fees for repayment requests that have failed.

Use a payday loan broker or comparison site

Applying for a payday loan through a broker or comparison site is simple. Your initial application goes to a portfolio of approved lenders. They will each decide if they can offer you a loan.

If you do not fit the criteria for a specific lender, they will not make you an offer. If you do fit the criteria, you may receive approval in principle.

You will be able to select the loan that you want, then complete your application with the lender.

If you are in self-employment, payday loans via brokers could offer a valuable service. You will not need to visit lender websites. Neither will you need to find the minimum criteria and checking that you tick all the boxes.

You can use one application form to reach out to a range of loan providers. That is, before selecting the most suitable from a list.

Be aware of self-certificated loans

Be aware of self-certificated loans

As a self-employed person, you may feel tempted to try a self-certificated loan. These are also known as self-certification loans and are on offer by some brokers.

If you apply for one of these, you will not have to prove your income. The figures that you supply are to provide your loan quote, without any verification.

These loans are high-risk forms of finance, typically offered by loan sharks. Self-certificated lending is banned in the UK.

The ban is in place because self-certification mortgages led to financial struggles. Many people had overestimated their income. They were then left with unmanageable debt levels.

Homeowners were unable to keep up their repayments. Many lost their homes as a result.

Self-certificated loans were often dubbed ‘liar loans’. Many people used the opportunity to inflate their income figures.

Some borrowers will use self-certification to provide an accurate income figure. Unfortunately, there are many that will over-exaggerate to receive a bigger loan.

Despite the UK ban, there are now some lenders using loopholes. These lenders open their companies in other parts of the world. While they operate overseas, they still provide credit to people in the UK.

When applying for finance, check that you can verify the lender that you are borrowing from. The Financial Services Register is an important place to start. They ensure you do not end up with an illegal self-certificated loan.

Self Employed with Bad Credit? No Problem

If your credit history is less than perfect and you are self-employed, it could be difficult for you to find a loan. Some reasons why your credit score may not be as high as you wish could include:

  • Late credit payments
  • Defaulting on payments
  • County Court Judgements (CCJs)
  • Insolvencies
  • Bankruptcies

This information could mean some lenders would see you as a risk if they allow you to borrow from them. Someone with a poor credit history might not pay them back.

If this situation looks like yours, your best option is to try and improve your credit score. The easiest way to do this is to make all your current credit payments on time.

Learn more about what no-credit-check loans are and if it’s an option that will suit you. If you happen to own a car or able to provide a collateral, your circumstances could improve with some lenders or specialist brokers.

Final Thoughts

how to get a payday loan for self employed

If you are self-employed, it may help to know that some lenders will still accept your application. This means that you will not fall at the first hurdle, and will have a chance to provide your income details.

Other lenders will not give your application a chance. Check a lender’s criteria, on their website, before applying.

Loan brokers may be able to help you to find a suitable online loan. They can send your application to many lenders at once. You will have more chance of receiving at least one positive response.

You might also want to consider applying for a guarantor loan, backed by someone that you know.

Self-certificated loans can be tempting but usually, come with a host of risks. Lenders offering this type of finance are not operating legally. They are also not FCA authorised and may resort to harassment and threats.

Before providing any of your personal details online, check the Financial Services Register. Confirm that the lender is fully authorised.