Can I get a loan if I am self employed?

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This page was last updated on 1 May 2022.

Can I get a loan if I am self employed?

With more than 4 million people who are self-employed in the UK, this makes up an important part of the economy. However, those who are self-employed or working for themselves often find it a lot harder to get access to credit such as finance or personal loans, because it is sometimes assumed that their income is not always stable and consistent.

After the financial crisis of 2008, banks and lenders became a lot more strict about who they lend money to. These measures can make it difficult for some people to find a loan, especially those who are self-employed.

To get a loan when you’re self-employed you will need to have a good credit history and be able to provide documents that prove to a lender you’re a suitable candidate. This guide is designed to give you an idea of the options available and how to maximise your chances of being approved.

Topics that you will find covered on this page

What kind of loan can I get if I’m self-employed?

There are various options for loans if you are self-employed:

Personal loan –  You will need a good or fair credit record to apply for a personal loan but you will not need to secure it against assets you own. This type of loan may last just a few weeks or even a few months, known as an instalment loan

Business loans – A business loan can be a good choice if you’re needing finance for your business. The lender will assess your business accounts (usually a minimum of 2 years trading accounts) and judge whether you’re a good candidate for a loan.

Secured loans – A secured loan utilizes the equity in your home or commercial property as a form of security. You will usually get a better rate of interest than a personal loan, so tend to be a good option for those who are self employed. Under this umbrella includes second charge loans, bridging loans and even remortgages. When borrowing against your home, your property is at risk of repossession if you cannot repay.

Guarantor loans – A guarantor loan means getting a guarantor (a family member or friend with a good credit record).  this person will be liable for repaying the loan in the event that you missed payment. A guarantor tends to make it easier to be approved for a loan.

Business credit card – With a business credit card, you are given a monthly credit limit and some providers will give you the option to draw down money from cash points and ATMs. Business cards have advantages, often helping with your daily cash flow and also giving you things like points and airmiles. 

How do I apply for a loan?

A few simple steps you need to follow to complete the loan-application process.


  •  Get your financial records in order – It’s very important that before you apply for a loan your financial documents are in order, including accounts, tax and profit and loss accounts. 
  •  Check whether or not you’re eligible – Many lenders will allow you to check whether you’re eligible for a loan without affecting your credit score. This means you won’t waste time applying for loans that you’re not eligible for.
  •  Compare loans to make sure you’re getting the best deal – It’s always important to know what options are available to you because alone is a big financial decision. make sure you have researched carefully and used a loan comparison site to make sure you are getting the most appropriate loan.

What documents do I need to apply for a loan?

Although the exact documentation you need there is from lender to lender, there are a few things that most lenders will expect to see:

  • Proof of identification; like a passport or driving license
  • Proof of address; usually utility better a council tax bill
  • Your tax returns
  • Bank statements 
  • Company business information
  • Proof of rental income (if you have any)

What if I have bad credit?

It’s not impossible to secure a loan if you are self-employed and have bad credit. However you will have a smaller range of options as fewer lenders will be willing to take you on as a customer. If you are accepted for a loan you may find that it comes at a high interest rate or that you aren’t able to borrow the amount you asked for. If you do have a poor credit score it might be worth considering an equity loan.

Article author

Katy Davies

I am a keen reader and writer and have been helping to write and produce the legal content for the site since the launch.   I studied for a law degree at Manchester University and I use that theoretical experience, as well as my practical experience as a solicitor, to help produce legal content which I hope you find helpful.

Outside of work, I love the snow and am a keen snowboarder.  Most winters you will see me trying to get away for long weekends to the slopes in Switzerland or France.

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