What are Loan Options for the Self-Employed?

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In these uncertain times, many small business owners, freelancers, or workers heavily involved in the gig economy are loudly wondering what their financial options are moving forward. Covering the basic costs of living, let alone attempting to keep operations or businesses afloat has proven to be incredibly tough at these difficult times.

Loans are the natural recourse for many people, but you might be wondering what kinds of monetary assistance you qualify for as a result of being self-employed. If this sounds like you, then read on for more information.

Collateral vs Secured Loans

There are different kinds of loans and lines of credit you could qualify for, depending upon the situation. For example, if you own some kind of property such as a house, you could be in luck – if not, then an unsecured loan might be your best bet. The experts stated in https://moneytrumpet.co.uk/ that an unsecured loan is great for those who cannot retain a guarantor. This is pretty convenient for those who do not like the idea of using an asset as collateral and do not really need to loan so much money. However, if that doesn’t fit your situation, you might want to look into collateral or a secured loan that is backed up by a piece of property like a car or house. Offering collateral helps to minimize the lender’s financial risk, which can help you get approved a lot faster. However, one important thing to remember about this kind of loan is that if you default, the lender may repossess your property or whatever savings you have to help recoup the money they have lost.

Payoff Loans

If your main issue is paying off credit card debt, then you can look into a loan that will help you consolidate everything. Payoff loans allow you to borrow enough money to pay your credit card debt, which is then consolidated into one fixed monthly payment for you, without accruing a ton of interest. These are helpful for numerous reasons, especially since they help you get out of debt sooner and build credit.

Home Equity

If you are a homeowner, you may be able to borrow equity from the home through a home equity loan. Or, you can look to secure a home equity line of credit. You would borrow a certain amount and only make payments on that amount for this type of loan basically functions as a line of credit. So, while it is risky to borrow against your home, it might also be a helpful way to secure much needed financial assistance in the short term.

Secure a Business Loan

A business loan can be especially helpful to those who are self-employed because it helps separate business expenses from personal finances. Of course, these loans are only used to cover the cost of business-related expenses rather than personal debts, so it would help if you are trying to keep your modest self-run enterprise afloat. If, however, you need this loan to cover half of your personal expenses as well, then you can definitely speak to your lender for more information. Be aware though, that you might be granted much less flexibility than with a traditional business loan if you decide to go down this route.

Even though being self-employed or running a small business in these trying times might feel especially frightful, there are ways to help you out of a bind if needed. Be sure to check with your bank and local lenders to understand what your options are, and research all avenues before deciding upon a clear direction.

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John is a serial entrepreneur and writer who is passionate about helping small businesses launch and grow. His work has been featured in Huffington Post, Entrepreneur, and Forbes.