Personal Loan Tips for the Self-Employed

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 Estimated read time: 2 Minutes

If you’re self-employed or a small business owner then it’s important you get all your financial ducks in a row, otherwise you may struggle to be approved for a personal loan.

The following guide provides some tips and tricks that could help you to get a personal loan when self-employed.

Be organised and informed about your finances before applying

The unpredictable nature of self-employment means that downturns and lulls in income may occur, this could impact your ability to make loan repayments.

To prevent falling behind on repayments and risking any penalties, it could be helpful to look for home loans that allow flexible repayments. This can help ensure that you have the flexibility to make extra repayments during periods when your income is high, and to compensate for the lean spells.

The ability to draw on money already repaid can be valuable for self-employed borrowers and is a feature worth asking your lender about. Also, if your income levels are particularly precarious, it could be an option to secure a loan that allows you to take repayment holidays when income is low. 

Plan for future lean periods

If you're self-employed and have fluctuating income, or you’re reliant on different sources of revenue, it could be a good idea to do your research when applying for a personal loan. Have a look at what might be accepted by lenders as alternative forms of earnings, including revenue from rent, shares and other investments.

It’s also important to be able to show proof of savings, as well as a positive credit history. Savings are generally categorised as either  genuine and non-genuine. As a rule savings are seen as genuine if they’ve been held in a bank account for over six months.

To support your application, it’s important to be organised and as diligent with your financial records as possible and to have these documents available and up to date for at least the past six months. It’s also a good idea to make sure your tax returns are accurate, up to date and paid in full. 


What to look for in a lender

If you’re self-employed then it’s a good idea to look for lenders that offer flexibility, are understanding about an individual’s circumstances and are sensitive to a borrower’s unpredictable financial future. Things to look for in a lender might include:

Whether the lender accepts alternative income documentation for credit approval
Flexibility regarding repayment periods, drawdowns and payment holidays
A lender that offers fixed or variable interest rates on their personal loans

We’re here to help

Simplicity, flexibility and clarity are the essential ingredients for anyone who is self-employed and looking to apply for a personal loan. To get you started, find out what your rate and repayments might be before applying, (it won't affect your credit score).

Got a question and looking for more tips for getting personal loans while being self-employed?
Call us on 1300 108 794.

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Information provided is factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser.

All applications are subject to credit assessment, eligibility criteria and lending limits. Terms, conditions, fees and charges apply. 

The results of the borrowing power calculator are based on information you have provided and is to be used as a guide only. The output of the calculator is subject to the assumptions provided in the calculator (see 'about this calculator') and are subject to change. It does not constitute a quote, pre-qualification, approval for credit or an offer for credit and you should not enter commitments based on it. The interest rates do not reflect true interest rates and the formula used for the purpose of calculating estimated borrowing power is based on the assumption that interest rates remain constant for the chosen loan term. Your borrowing power amount will be different if a full application is submitted and we complete responsible lending assessment. The results in the calculator do not take into account loan setup or establishment fees nor government, statutory or lenders fees, which may be applicable from time to time. Calculator by Widgetworks.

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