Over recent years, the UK gig economy has been mushrooming at an outstanding rate. People are getting lured towards the flexibility and potential awards of becoming self-employed due to the blend of high inflation and sluggish wage growth in the UK, due to Brexit. The rate of sprouting firms is rising, with nearly 5.7 million new businesses in the UK. Though- 29% of the small business individuals in the UK expect Brexit to impact their business depressingly.
However, despite the big companies holding the booming drift, sadly, the banking sector has deceived to keep up with the fast pace of change. As a result, only 36% of the self-employed people get credits, and others find it hard to find medians to finance their expenditures.
Nevertheless, if you too find it hard to get a loan that can help you expand your business then, read this blog to know-
how to get a loan when you’re self-employed.
The basic eligibility that you need to follow when applying for a loan are:
- You must be at least 18 years of age or above.
- Have a bank account in your name.
- Give proof of employment or an active source of income.
Use a loan broker
As of February 2018, the cost of outstanding unsecured consumer credit rose at £209 billion in the UK, and more and more people are getting likely towards unsecured borrowing- like self-employed loans. Hence, getting a professional opinion is worthwhile. Drawing into a broker’s knowledge will enable you to get more learning than internet research alone. They can provide you with information on many money lenders that can give you the prospective loan deal.
Check your credit history
Before applying for a loan for self-employed, check your credit report for any red flags in your credit history such as one-off missed repayments or errors, as when you do so- a drastically different picture appears. If you find out you have an adverse credit history, it’s worth, going directly to a broker. As brokers are more flexible when it gets to your credit score. The high street banks tend to have stringent criteria on this, which makes the professional lender better and affordable sources of finance.
Regular source of income
The economy is showing indications of a turnaround, and 34% of the self-employed people think that- it will get more difficult for them to access finance post-Brexit and they might lose the source of their active income. Hence, they are either working towards managing and upholding their financial necessities or trying to get aid from licensed lenders. However, the reason that self-employed people generally have fewer lenders who want to work with them is that- lenders see them as a risk.
An employed person gets a regular wage every month. With self-employed people, regular earning prospective is a little less. Hence, they tend to be a bigger gamble to moneylenders. Still, following the right approach, they can also get loans for self-employed to finance their venture or to pay for unexpected expenses
In the end- always consider each alternative before you settle for one. As non-repayment of your loan can harm your financial stability and can further damage your credit score. Hence, think wisely and act smartly!