A self-employed individual can be a freelancer working on multiple different projects at once, but without being officially employed by a company, or a newly-founded business owner with no stable or fixed income. South Africa’s lenders typically ask their borrowers to provide them with payslips, proof of a regular monthly income, and evidence of residence. Due to this, it can be quite difficult and sometimes impossible to get Payday Loans For Self-Employed.
Since self-employed individuals do not have any guarantee of work and income, they may find it difficult to get a loan in general.
If they have bad credit, things can get even worse and more difficult.
How do we know this?
The majority of lenders rely on their borrowers to have a strong credit score or to be able to provide collateral that will be taken over by the lender if the borrower defaults on their loan. Most lenders select this route because it almost eliminates the danger of not being repaid by a borrower.
Payday loans are regarded for being one of the more straightforward types of loans to obtain, especially when compared to traditional loans or loans that need collateral, such as vehicle title loans. Payday loans typically outperform other types of loans in terms of advantages, making them a perfect financial option for many people.
Good credit ratings indicate that the borrower has a track record of repaying borrowed funds on time. Collateral on the other hand entirely eliminates the danger of not being reimbursed because the borrower’s collateral may be resold to recoup the cash granted to him. if he or she fails to repay the loan.
If you don’t meet the first two criteria, getting a loan from a traditional lender is out of the question because they don’t care if you have a steady income or not; instead, they look at your credit score (which should be good) or whether you have collateral to offer if you don’t have any credit history..
In either case, bad credit score holders may find it difficult to obtain funding from a traditional lender.
What can be counted as time-taking? CREDIT CHECKS!
As a way to save time and fund borrowers as quickly as possible, payday loan lenders do not conduct credit checks. This is because credit checks can take quite a while. Since payday loan lenders offer short-term loans without credit checks, even those with bad credit can receive funding from them.
We can conclude that payday loan lenders offer cash to everyone regardless of their credit rating.
How Does Collateral Work for Payday Loans For Self-Employed?
Processing collateral takes time, which is another reason why payday loan providers avoid it. They don’t ask for collateral for two reasons. Firstly, it takes time. Secondly, they don’t see the sense in going through all the trouble of processing collateral for a loan of a few hundred dollars or less.
So, What DO Payday Lenders Rely Upon Afterall?
In order to grant loans to their customers, most payday loan lenders rely on their clients’ income statements. Apart from a few fundamental requirements, such as residing in the state in which they are requesting for a loan and being at least 18 years old, payday loan lenders rely heavily on evidence of income.
There should be no difficulty in sponsoring someone as long as they can show through their income statement.
Where can you get a payday loan for self-employed people?
Below are some lenders who offer loans for self-employed people:
Self-employed individuals who receive their salary directly from their business can borrow up to R250 000. Nonetheless, informally self-employed people like freelancers and sole traders might not be eligible to apply.
For self-employed individuals, Standard Bank offers vehicle and home loans. The owner of the business will need to provide financial statements, as well as a statement of assets and liabilities.
Prospective applicants can borrow short-term funds of up to R4000 as a new customer and up to R8000 if you’re an existing customer.
Nedbank self-employed loans range from R2000 to R300 000 if you have a monthly income of more than R3 500.
When you have a regular monthly income of R2000 or R1500 on your bank statements, you can qualify for a personal or smaller personal loan.
If you qualify, you can borrow up to R300 000.
Self-employed loans can be used to cover a wide range of financial needs, including business costs and personal expenses. In addition, self-employed loans are good for emergency situations since some of them provide fast payouts.
As a self-employed individual, you can typically find a loan product that works for you if you have trouble getting funding in the past.