If you need money to cover an unaccounted cost and you don’t have savings available to bridge the gap, you might think about searching for a short-term loan.
‘Can I get a loan if I’m self-employed?’ is a common question.
The CashLady guide to loans for people who are self-employed shares some key information.
What is a short-term loan for self-employed people?
A short-term loan for self-employed people is a sum of money borrowed from a lender, and is usually used to cover an urgent, unplanned expense, such as a replacement boiler.
Unlike a payday loan, which you’d typically need to repay within a month, a short-term loan usually comes with a range of repayment terms. Having more time to repay the loan could make your monthly repayments more manageable for your budget.
A short-term loan will be repaid in monthly instalments, which will include interest.
Can I get a short-term loan if I’m self-employed?
You could get a self-employed short-term loan, although you might find that your borrowing options are limited.
When a lender assesses your affordability for a loan, they will want to make sure that you’re comfortably able to afford to repay the money you’re applying to borrow. They will check to see whether you have a steady, predictable income. Some lenders may have criteria in place which requires potential borrowers to have a certain amount of income per month or year.
If your business brings in an inconsistent income, you might struggle to find a lender willing to consider your application.
Can I apply for a short-term loan for self-employed people?
The eligibility criteria that you must meet to enable you to apply for a self-employed short-term loan will vary between lenders.
Generally, you’ll need to:
- Be over the age of 18;
- Be a UK resident;
- Have a UK bank account and valid debit card; and
- Have a regular source of income paid into your bank account.
Could I get a short-term loan for self-employed people with CashLady?
CashLady is a credit broker, not a lender. While we do not specialise in searching specifically for loans for self-employed people, we’d be happy to help you search for a suitable short-term loan, providing you meet the above criteria.
We work with a panel of over 30 direct lenders, all of whom are authorised and regulated by the Financial Conduct Authority (FCA).
How much can I borrow if I’m self-employed?
With CashLady, you can search for a short-term self-employed loan from £100 to £10,000.
As discussed, you could face certain restrictions when applying for a self-employed loan. In some cases, you might not be approved to borrow the amount of money that you need and may have to settle for a lower amount instead.
How long do I have to pay off my short-term loan for people who are self-employed?
Depending on the amount of money you apply to borrow, the lenders on our panel offer short-term loans with repayment terms from 3 to 60 months.
How could a credit broker help me search for a short-term self-employed loan?
A credit broker, like CashLady, could save you time and protect your credit score.
Rather than guessing which lender might consider your application, a credit broker can scan a panel of multiple lenders at the same time to search for a self-employed loan that could be a suitable option for you.
CashLady uses soft search technology, with no impact to your credit score.
When you apply for a loan directly with a lender, they’ll complete a creditworthiness assessment, which will include a hard search or Open Banking. If your application is turned down, you might then apply elsewhere, which runs the risk of multiple hard searches being carried out. Too many hard searches within a short period of time will damage your credit score.
I want to search for a short-term self-employed loan; how does it work?
When you’re looking for a loan to help you plug a financial emergency, the last thing you need is an over-complicated procedure that requires you to jump through hoops and leaves you feeling even more stressed.
The CashLady process has been designed to be as straightforward as possible. Here’s what you can expect.
- Step one: fill in our online form; this should take around five minutes. Let us know some basic information about you, how much money you need to borrow, and how long you’d like to borrow it for.
- Step two: in just 60 seconds, we’ll complete a soft search and scan our panel for a suitable lender for you, based on the information you’ve given us.
- Step three: if you’re matched with a lender, you’ll be redirected to their website where you can find out more about the loan offer. If you’d like to make a full application, the lender will carry out a creditworthiness assessment. As discussed, this will include a hard search or Open Banking.*
- Step four: if you pass the lender’s creditworthiness assessment, you’re certain that you want to accept the loan, and can afford the monthly repayments, the lender will let you know when your money will be sent.
Important: you’ll be sent a loan agreement, which will include your repayment plan and the terms and conditions of the loan. Please take your time in reading through this carefully. Remember, you’re under no obligation to accept a loan offer unless you’re completely happy with it.
How quickly could I get a self-employed short-term loan?
If you’re approved for a self-employed short-term loan, a number of the lenders on the CashLady panel could send your money today. Please note that every lender will have their own payout timeframe, and the time it takes for the money to become available in your account will depend on your bank’s policies and procedures.
Can I get a no credit check self-employed short-term loan?
If you’re self-employed or lack confidence in your credit score, you might find yourself wondering whether you could apply for a ‘no credit check loan.’
However, in the UK, it’s not possible to get a loan without a full credit check, also known as a ‘creditworthiness assessment’. This is in line with regulations set by the FCA, which aim to help reduce the risk of borrowers falling into financial hardship.
What sort of documentation will I need to apply for a self-employed loan?
Again, it’s important to remember that every lender is different and the document requirements will vary.
Typically, you may be asked to provide:
- A form of identification, such as a driving licence or passport;
- Proof of your current address; and
- Recent bank statements.
If you’re applying for a loan as a self-employed person, you could be asked to share the following:
- Your most recent tax return; and
- Bank statements for your business account.
Could I get a self-employed short-term loan if I have bad credit?
Some lenders, including a number of those on the CashLady panel, specialise in loans for people with bad credit.
While you might be able to apply for a bad credit short-term loan, you should be aware that you could be offered a high rate of interest, and this will impact the overall cost of borrowing and your monthly repayments.
Will a short-term loan for self-employed people affect my credit score?
All credit products will influence your credit score, and a short-term self-employed loan is no different.
How your credit score is affected by a loan will depend on how you manage your repayments. Making your repayments on time each month could result in an improvement in your credit score, providing that your bills and any other credit commitments have also been managed responsibly.
A late or missed repayment could cause your credit score to decline. Depending on your lender, you may also be charged a fee.
Can I pay off my short-term self-employed loan early?
Some lenders will allow you to clear the balance of your loan before the term comes to an end, although some could charge an early repayment fee.
Details about whether your lender accepts early repayments, and whether or not they charge a fee for this, will be included in your loan agreement.
What if I can’t afford to repay my short-term loan for self-employed workers?
If you’re struggling with your finances and worry that you might miss an upcoming repayment on your self-employed short-term loan, you should contact your lender as soon as you can.
A trained advisor will be able to chat to you about any available options, which could include temporarily reduced repayments or a repayment holiday.
Where can I get advice on money and debt?
Money worries can feel isolating, but please know that help is available. Talking about money can be uncomfortable, but the charities and organisations listed below can offer free, confidential, and practical advice on a range of topics, including debt management and the cost-of-living crisis.
*A hard search will be visible on your credit file for up to 12 months. Multiple hard searches in a short space of time will harm your credit score. Open Banking is a safe and secure procedure used by authorised third-parties, such as a lender. With your consent, Open Banking allows your chosen lender to view your recent financial activity via your online bank account.