self employed business loans uk

Self employed small business loan

self employed business loanSelf employed business loans are specifically designed to benefit self employed people. As the self employed population in the UK continues to rise, due to people realising the benefits of entrepreneurial pursuits, self employment loans remain increasingly important as a financial product helping this sector benefit from access to borrowing capital and credit.

With more than 4.3 million self-employed individuals living in the UK, and some high street lenders deeming self-employed workers too ‘risky’ to borrow cash, self-employment business loans are becoming a popular way of obtaining assets and funding projects quicker than ever before.

Compared to traditional loan products being offered by mainstream lenders, self employed business loans often come with lower interest rates, making it easier for self employed people to save money when looking for funding or additional capital for their self-employed venture.

With all these advantages in mind, self-employed business loans are understandably an attractive choice for self-employed professionals who need quick access to finance.

What is a self employed business Loan?

Self-employed individuals have their own unique set of financial needs that can’t always be easily addressed through traditional banking. This is where a self-employed business loan comes in; it helps those who are self-employed to access the financial support they need. Business loans provide a lump sum to help entrepreneurs and freelancers purchase equipment, stock, or invest in marketing initiatives.

The high degree of flexibility offered by lenders that offer these loans makes them an attractive option for anyone looking to maximize the potential of their venture. For example, borrowers might look at product lines that operate outside their usual business scope or investment opportunities in emerging markets.

These loans allow the borrower to use existing collateral as security and spread the loan amount over longer terms with lower rates – features which make repaying the loan much easier and more manageable than other options such as bank overdrafts or credit cards. So if you’re needing some extra capital to grow your business as an entrepreneur or freelancer, self-employed business loans are worth considering.

How do self employed loans work?

Self-employed people have a lot of options when it comes to taking out loans. They can choose from unsecured or secured loans, depending on their needs and the amount of risk they are willing to take. Unsecured loans are generally easier to qualify for, but they also come with higher interest rates. Secured loans typically have lower interest rates, but they also require collateral, such as a home or a car.

Self-employed people can also choose from short-term or long-term loans, depending on their financial needs. Some lenders will loan out funds for up to 10 years. However, self-employed people typically have to pay back the loan within a few years. With our lenders’ self-employed business loans, you can access between £1,000 and £500,000 in funding.

The money can be used for any business purpose, and you will pay it back with interest over a set period of time. These loans work much like any other type of loan, so you will not have to worry about any hidden fees or charges. If you are self-employed and need a loan, our business loans are a great option to consider.

Types of business finance for the self employed

There are a number of different types of business finance available to the self employed, these include:

Secured loan

Secured loans for self employed workers are a type of loan in which the borrower uses an asset, such as a home or a car, as collateral. This means that if the borrower is unable to repay the loan, the lender can take over ownership of the asset and sell it in order to recoup their losses. Secured loans can be a great option for self employed individuals, because they offer lower interest rates and longer repayment terms than unsecured loans. It is important to remember that if you default on your repayments, you could lose your home or your car. As such, secured loans should only be taken out by individuals who are confident that they will be able to make their repayments on time.

Unsecured business loan

Unsecured self employed loans are a popular option for people who work for themselves. Whilst they aren’t secured against assets, they do usually require security in the form of a personal guarantee. This means that if you are unable to pay back borrowed business funds, you must repay using personal funds. Unsecured loans can be a good option for self employed people who don’t have any assets that can be used as security. You should be aware that if you default on the loan, you could put your personal finances at risk.

Merchant cash advance

A merchant cash advance is a type of funding that provides businesses with working capital in exchange for a percentage of future credit and debit card sales. Unlike a traditional loan, there is no set repayment schedule, which means that businesses can use the funds as needed and make repayments based on their sales volume.

This flexibility makes merchant cash advances an ideal solution for businesses that need access to quick funding but may not be able to qualify for a traditional loan. In addition, merchant cash advances can be used for a variety of purposes, such as covering operational expenses or investing in new equipment. As a result, this type of financing can be a valuable tool for businesses of all sizes.

What can self employed loans be used for?

Unsecured self employed loans can be used for anything that will positively impact your business. This could include paying the rent for your office space, or marketing your products or services. It’s important to note that you should not spend a self employed loan on personal purchases. In this instance, a personal loan would be more appropriate.

There are many lenders who offer unsecured self employed loans, so it’s worth shopping around to find the best deal. Make sure you read the small print before signing any agreements, as you don’t want to get into financial difficulty further down the line.

  • Business equipment
  • Office renovation
  • Purchasing stock
  • Advertising & marketing
  • Consolidating debt
  • Expansion plans

What are the advantages of self employed loans?

One of the advantages of being self-employed is that you have more control over how you spend your time. However, when it comes to financing your business, this can also be a disadvantage. Traditional lenders often require extensive documentation and proof of income, making it difficult for self-employed individuals to qualify for loans.

However, there are now a number of lenders who offer loans specifically for the self-employed. These loans often have less strict eligibility requirements, and the funds can be used for a variety of purposes. Whether you need to purchase new equipment or renovate your office space, a self-employed loan can give your business the cash injection it needs to grow.

  • The money can be spent as you please: Your self employed business loan can be used to replenishing stock.
  • Flexible payment terms: Choose between unsecured and secured loans, with short or long term repayment periods.
  • Get cash quickly: Lenders that offer self employed loans usually arrange same day finance.
  • Ideal for smaller firms: Small business loans for the self employed are the ideal funding choice for freelancers, micro-businesses and small companies.

Are there any disadvantages of self employed finance?

While self employed finance can offer many benefits, it’s essential to be aware of the potential drawbacks too. One key disadvantage is that self employed loans can be more difficult to obtain than traditional loans. This is because lenders are often reluctant to lend to self-employed individuals, as they may be considered a higher risk. As a result, it’s important to do your research and compare different loan providers before applying for financing. Another potential drawback of self employed finance is that the interest rates may be higher than what is available from traditional lenders.

This is because self employed loans are often considered to be high-risk by lenders. The benefits of self employed finance may outweigh the disadvantages for some businesses. Self employed finance can offer fast and flexible funding, which can be vital for businesses that need to access capital quickly. In addition, self employed loans can often be tailored to meet the specific needs of your business. As a result, it’s important to weigh up the pros and cons of self employed finance before making a decision.

  • High risk funding: If you’re thinking of securing a loan with property, it’s important to be sure you can make the repayments. If you can’t, you could face losing your home. Of course, this isn’t the only risk involved in secured loans. If the property you use as collateral decreases in value, you may end up owing more than the property is worth. And if the lender decides to call in the loan, you may not have enough time to find another buyer. So, while a secured loan can offer some advantages, it’s important to understand the risks before you sign on the dotted line.
  • Can be expensive: Many traditional lenders require extensive documentation and proof of income, making it difficult for the self-employed to qualify. As a result, many self-employed individuals turn to unsecured loans, which tend to have higher interest rates. While this can increase the total amount that needs to be paid back, it can be a necessary option for those who don’t have access to other funding. Loans can be a quick and easy way to get the funds you need without having to go through a lengthy application process. If you’re self-employed and in need of a loan, an unsecured loan may be your best option.
  • Potential to impact your credit score: Your credit score is a important factor that lenders look at when considering whether or not to give you a loan. It’s also used by landlords and employers to help them determine if you’re a responsible person. That’s why it’s so important to make all your payments on time, every time. Even one late payment can negatively affect your credit score, making it harder for you to get approved for future loans. So if you’re ever in danger of missing a payment, be sure to reach out to your lender and try to work something out. That way, you can avoid damaging your credit score and making it harder to get the financial help you need in the future.

Can I get a self employed loan with bad credit?

Getting a small business loan if you are self employed with bad credit may only be offered credit at high interest rates, reflecting the greater risk they represent to the lender. The self employed can lower the risk of bad credit by improving gradually by paying off old debt and managing new debt responsibly. This is summarised in a score. A low credit score means that a borrowing business could be considered a risky prospect.

Self employed bad credit business loans for small businesses can be expensive and not all UK businesses will be able to access them.

Lenders of business finance use modern underwriting techniques to form decisions based on how your business is doing today, right now, not just your credit history. Just because you’ve had problems with credit in the past doesn’t mean that the door is completely shut when it comes to sourcing finance for your business in the future.

Am I eligible for a self employed loan?

The best way to find out whether your business is eligible for self employed financing is to submit a quick online application and wait for us to get back to you. If you’re in doubt, take a look at the below criteria:

  • Be registered with the HMRC
  • Freelance or self employed business
  • Six month minimum trading history
  • Over the age of 18 years old
  • A monthly turnover of at least £5,000

Apply for a Self-employed Business Loan

If you are self employed and looking for a business loan the application is so easy to get started, just follow these simple steps and you’ll be on your way to getting the cash boost you need:

Step 1:

Applications can be processed online by clicking on “Get a Quick Quote”. The following information will be required:

  • The registered name of your business venture
  • Registered office address
  • Your businesses monthly turnover
  • Loan amount, how much is required

Step 2:

The next step will be a request for some personal details, including:

  • Full name
  • Your contact number
  • Email address so we can send you out terms and conditions

Step 3:

You will need to agree to the terms and conditions.

Step 4:

We will review the application and assign an account manager to your application. If it is approved, we will let you know within 24 hours.

Step 5:

Both parties need to sign the agreement before the loan can be paid out. Our turnaround of completion usually takes between 2–5 days from recipe of application form.

Lee Jones Profile Image
Business Finance Expert at PDQ Funding

Lee Jones is a seasoned Business Finance Specialist with over two decades of invaluable experience in the financial sector. With a keen eye for market trends and a passion for helping businesses thrive, Lee has become a trusted advisor to countless organizations seeking to navigate the complexities of finance.