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Finding a company that will approve a freelancer loan – whatever your field or sector – can be particularly tricky.
In the eyes of the bank, as a freelancer (or contractor, consultant or self-employed) you’re a bit of a gamble. You have no job security to speak of (at least compared to those in full time employment), and no regular income if you start to go through a bit of a dry spell (which, let’s be honest, is almost a certainty with freelancing, which can be notoriously peaky-and-troughy, especially when you first start out).
However, with almost 14% of the UK workforce made up of freelancers (and that number expected to rise post-Brexit), there have to be ways for them to get cash in an emergency or to fund a big purchase.
Here are our top tips to improve your chances of being approved to borrow money for a freelancer loan if you’re a freelancer.
When applying for a freelancer loan make yourself as appealing as possible to the lender
Have on-going clients or a written agreement for work every month? Or maybe even clients that hire you on an on-going basis? Great. You’re a step closer to getting approved. (If you don’t have these, why not contact your regular clients and get them to write you a letter saying that they plan to use you for the foreseeable future?)
Lenders don’t intentionally discriminate against freelancers, but err on the side of caution. If you can demonstrate that you have regular money coming in – even if it’s only a base amount that you top up with one-off projects – then they can see that you will be able to make repayments, even if your one-off work dries up.
Gather up all invoices, contracts and communications from your big clients and show them to the lender – this will make a big difference to your chances of being approved for a personal loan. If you can get an accountant certificate from your accountant – that acts as proof of earnings – even better.
Fix your credit score as much as possible
This advice isn’t specific to freelancers, but is still just as relevant. When your career already establishes you as a bit of a risk to the lender, it’s important to make sure that your credit score doesn’t confirm this idea. Better still, it’s great if your credit score says ‘I know their career is a bit of a risk, but they always pay their bills on time and have had no problems with repayments’.
Look at independent brokers or non-high street banks
A freelancer loan is hard to get but there are many loans out there. But you’ll have to think a bit laterally about it – try looking for loans for self-employed people instead. After all, that’s what you are. You’re your own boss.
There are comparison sites that compile loans for the self-employed, and if you’ve made yourself as attractive as possible (with accounts, invoices etc…) then you stand a fairly high chance of being approved.
In fact, if you’ve got provable income (and – even better – own your own house to put up as collateral) then it might even be worth speaking to your high-street bank. Although the loan may not be available online, you might find that, by speaking to your bank (who have all of the information about your finances already), you’re offered a loan just like anybody in regular employment.
Consider a guarantor loan
Having a guarantor for your loan can sort of even out the lender’s idea that you’re a bit of a risk when you’re self-employed. By having the guarantor vouch for you and agree to pay your repayments should you not be able to, the lender is much more likely to lend you the money you need.
At Bamboo, we offer a range of personal loans that might be able to help you out. To see if you’re eligible, why not take our quick eligibility test? If you’re successful, the money could be in your account within 24 hours. Representative 49.7% APR. A guarantee may be required.
- Author Jack Barclay
- Posted 18 August 2016