One of the more frustrating things about being self-employed is that it can be hard to get people to believe you when you tell them you make a certain amount of money. Without some third-party verification, most banks are loathe to give you a personal loan, no matter how much money you claim to make. Having an organized, accurate and reliable bookkeeping process will help, and being able to show receipts and deposits from payments you get are useful, as well.
There are several different types of personal loans you might look into when you’re self-employed, including:
- Traditional bank loans. These personal loans may be secured, and require you to put up some real property as collateral such as a home or a vehicle. They may be unsecured, which is a personal loan that doesn’t require collateral but probably has a higher interest rate.
- Home Equity Line of Credit. This is a loan that’s flexible in its amount and usually in its interest rate. You borrow against the value in your home, and the bank in turn gets a secured interest in the home. This kind of loan comes on an as-needed basis, rather than as a lump sum.
- Credit card cash advances. This is not at all the ideal kind of loan to take when you’re self-employed or otherwise. In some instances, however, it’s really your only option. It beats out other options like payday loans and pawn shops, but just barely. You’ll pay not only a higher rate of interest on the cash advance balance, but also an administrative fee.
- Payday loans. These loans are perfectly legal and they meet a specific need. However, you should avoid them at all costs. Let’s face it, even if the loan period is only two weeks, 300 percent or more is too much to pay in interest.
- Small business loans. There are a number of different types of small business loans available to business owners. If you intend to use the capital to invest in your business, these kinds of loans are probably more ideal than the various kinds of personal loans you might take.
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