As a self-employed employee, I know first-hand how difficult it is to get any kind of loan. Whether it is a mortgage, a credit card, an instalment loan or a payday loan, when you can’t show steady income, it becomes very difficult to get loans and that can be really frustrating.
It is hard enough getting a business off the ground, but, to make matters worse, getting access to some emergency funds becomes almost impossible. So, what exactly do you, as a self-employed worker, have easy access to and what take a little more time and effort to obtain.
GETTING A MORTGAGE
Let’s tackle the big one first: the mortgage. Getting a mortgage is difficult, but not impossible. Banks tend to be a little cautious when it comes to lending money, so they generally like to see several years of steady income. They will ask to see your income taxes that were filed for the past several years just to make sure that you have some sort of steady minimum amount. The problem, then, is when you are still just starting out. I don’t want to be the bearer of bad news but, applying for a mortgage when you are newly self-employed (less than 3 years) is definitely not the easiest thing and might be difficult.
But what happens when, in between jobs, you find yourself a little strapped for cash? I know what it is like to be patiently checking the mailbox waiting for your customer’s payment on that last invoice! It seems like it takes forever to arrive! But, given your sporadic payments, will the bank even approve you for a quick loan? The general answer is that turning to a bank for a cash advance is not recommended. Banks are in the long-term business. One option is finding a direct lender for a payday loan or a cash advance. The requirements for a fast, online loan are generally to have a minimum monthly income ($800) and to have a bank account that can be used as a guarantee. The only problem is that they want to know when you get paid so that they can debit your account on that date. But, assuming you receive any kind of regular income (ex: child tax credit), you can generally find a way to satisfy the requirements without having a steady, regular paycheck.
Although getting approved for financing when self-employed is more difficult, it is far from impossible. And, in most cases, things like payday loans can actually help kick start that business and take it to the next level!