Do you think you are tired with the way your professional history is progressing? Do you want to chuck your current job out through the window and start something on your own? Self employment is the rising trend in today’s economy and even though it may seem very risky and unstable, self employment does have many benefits to offer.
If you have decided that you will start a job on your own, you need a loan. But you cannot apply for a regular loan, because most lenders do not consider self-employed people capable of making steady payments. Self-employed people do not get fixed amount of income every month, and that is why it is hard for the lenders to feel assured that their borrowers can pay back the loan in full within time.
However, this is not a matter of concern since you can easily opt for the self-employed loans which have their own benefits. Firstly, this method is highly flexible and easy to deal with. You do not have to pay a fixed amount of money at all, since you can pay according to your income. If your monthly income is high, you can clear up a major part of your loan, or if your profit is low, you can even make an underpayment and not be harassed for it.
However, you will have to pay a higher interest than the one set for regular loans. This is not a disadvantage at all, since this method will work to your advantage. Plus, the interest rates now are at an all time low level, the APR being 7%.
With self employment loans you also get payment holidays. This refers to the period when the borrower can take a complete break from paying back the loan. This usually refers to a moment when the profits of the borrower hit a low or he decides to venture into another business enterprise. In either case, you have to explain your situation thoroughly to the lender.
You can also convert the excess of equity in your home. However, if you provide certain collateral to the lender, you can even improve the terms of self employment loans. In regular loans, lenders want to see your income certificate to see that you are capable of making continuous payments every month. However, since self-employed people often try to cover up their income resources to evade tax payments, lenders do not think of lending money to them a safe decision. In self-employment loans you will have no hurdles like that, since here you would be required to certify your own income all by yourself.
How to present your business plan to get a bank loan
Do you have a great idea but do not have the material resources to put it into practice? Do you know how to present your idea so that you can get the credit you want? If you still do not have a clear plan in mind, there are many useful tips to help you finish your plan.
For those entrepreneurs who do not have the money to implement their ideas, banks can be the most convenient option. However, for many of them the process of obtaining a bank credit is a reason for anxiety and confusion.
The most important aspects that bank managers take into account when accepting a loan are without a good business plan and financial forecasts for the coming months. The good news is that you can do all this with a little preparation and good documentation.
A first step is to answer some of the most important questions, namely:
• What model is your business based on?
• What are your goals and strategy?
• Where does your business place in the long run?
• What are your potential customers and how do you plan to address them?
• What is your competition? How do you plan to differentiate yourself from it?
Whether you need money for working capital or even for small investments and you do not have guarantees, bank offers you the necessary financial resources in the form of a non-denominated need loan, for which no material guarantees are required. Moreover, there is no need to justify the destination of the money – we know that everything you want is your business to go.
The necessary money can be accessed at any time (within the approved amount)
• You benefit from a grace period of 12 months
• You manage your current business expenses quietly
• Pay wages, suppliers or even taxes to the state on time
• Refinance loans contracted to other banks.
Some Last Words
Self-employment loans have many benefits if you are not a regular employee. Not everybody can apply for a self-employment loan since that would mean that the lenders would have to spend their time in extra calculations as their borrowers would not offer steady payments but in variations. This would be problematic. Only if you are self-employed could you apply for this type of loan.
