Self-employed and seeking finance? 3 tips to help you get started. 

Self-employment can be rewarding and offer flexibility. On the one hand, it provides freedom to work flexible hours, on the other hand, some businesses may take time to build before they start generating consistent income. 

Unfortunately, this can create challenges when it comes to getting a loan and providing your income. 

What’s the issue?

Because self-employed workers often earn an irregular or inconsistent income, traditional lenders are often reluctant to offer finance, and unfortunately “sorry we can’t help you” can be a common response to many an application for finance.

While it can vary by lender, most big banks will require self-employed workers to have filed at least two years’ worth of tax returns as evidence of their earnings.

However, when you have a business to run, keeping on top of your tax returns can fall down the priorities list. Plus deadlines for lodging your business’ tax returns can vary depending on the structure of your business and whether you are using a registered tax agent.

This can mean that a self-employed worker has to be in business for longer than two years before they even start to meet the banks’ assessment criteria.

If your financials are not up to date or you’re in the first few years of being self-employed, which is often when new equipment or a new vehicle is needed, it can be hard to get the finance to help the business move ahead.

3 tips to help you get finance as a self-employed worker?

Proof of income

For self-employed borrowers, traditionally lenders have required the last two years’ audited personal and business tax returns to confirm an applicant’s income.

However, we at Dash Money appreciate the challenges this can sometimes present and will accept alternative documentation as a way to verify your proof of income. 

Bank statements, business activity statements or an accountant’s declaration are all examples of other forms of income verification. Loans for self-employed borrowers that allow this type of income verification are often referred to as ‘low doc’.

Build your credit file

Another way to help get your loan across the line is to ensure you have a strong credit file and show that you can manage credit responsibly.

This can be as simple as paying down existing debts and ensuring you pay your bills on time.

Most low-doc lenders will assess borrowers with imperfect credit history on a case-by-case basis, but a stronger credit file may mean you’re able to negotiate a better deal.

Your accountant can help

With a comprehensive knowledge of your business performance and financial situation, your accountant can often provide support to your loan application.

Ready to get started?

Find out more about a Dash Money loan if you’re self-employed. Speak to one of our Lending Specialists on 1300 327 448 or request a callback.