Qualifying for a personal loan may not always be a simple process. Lenders usually want to see that you are employed and that you will be able to afford repayments. As a self-employed individual you may find it slightly more challenging to get access to a personal loan.
In South Africa, self-employed individuals are finding it increasingly challenging to obtain finance from traditional lenders. They are often viewed as high risk candidates with unpredictable earnings.
This can often be a result of the strict regulatory environment.
The perceived risk of being self-employed is much greater in South Africa, than in other parts of the world.
South Africa’s economy isn’t as stable as first world economies, so self-employed individuals are seen as riskier candidates.
Lenders are more likely to grant loans to those who have demonstrated financial discipline.
Tips for getting loans for self-employed people:
Have your finances in order
You need to make sure that you keep your finances in order, so that you can demonstrate that you are responsible.
Confirm whether the business will be able to pay a self-employed individual a justifiable salary
By providing proof to lenders that your business is running profitably, and that you can afford to pay yourself a monthly salary comfortably, you may be able to improve your chances of getting loans for self-employed people.
Provide your latest 6 months’ bank statement
This should demonstrate consistent finances, which can be a good indicator of stability
Provide a comprehensive income/expenditure statement for the business
This will be a good indicator of how well your business is functioning
Provide your latest business and/or personal financial statements
This should indicate your positive cash flow
Provide details of management accounts for the current year, verified by a qualified professional
Your financial records should be validated by a registered professional