Best Personal Loans for Freelancers and Self-Employed
Freelancing and self-employment have seen a remarkable rise in recent years, especially following the pandemic. With over 76.4 million freelancers in the U.S. as of 2024, this dynamic workforce is reshaping the economy, contributing $1.27 trillion annually. As more professionals embrace flexibility and independence, finding the best personal loans customized to their unique financial needs becomes crucial. In this blog, we’ll explore the best personal loans for freelancers and self-employed individuals.
What Does Self-Employed Mean?
Self-employed individuals work for themselves rather than for an employer, earning income from their own business, trade, or services. They can operate as sole proprietors, independent contractors, or partners in a business. Self-employment offers flexibility and autonomy but requires managing taxes, income variability, and business responsibilities.
How Personal Loans Work for Self-Employed Borrowers
As a self-employed individual, you know that managing finances can be a bit more complex than for those with a traditional salary. But don’t worry, personal loans can still be a great financial tool for you. The main difference is that lenders need a bit more information to assess your income stability. Instead of W-2 forms, you’ll typically provide tax returns, bank statements, or profit-and-loss statements to show your financial situation. This helps lenders understand your ability to repay the loan, even with irregular income.
When it comes to loan amounts, you can usually borrow between $1,000 and $50,000, with some lenders offering up to $100,000 or more. The loan is given to you all at once, and you repay it in monthly installments over a term that can range from one to seven years. Interest rates vary, but they generally fall between 7% and 36%. If you have a strong credit score think 670 or higher you’re more likely to get a great deal with a lower interest rate. Remember, it’s all about finding the right fit for your financial
situation.
Now, you might notice that lenders sometimes use manual underwriting for self-employed borrowers. This just means they take a closer look at your financial records to get a better understanding of your situation. It might take a bit longer, but it’s worth it to ensure you get the best possible terms. To boost your chances of approval, focus on maintaining a solid credit score, providing clear income documentation, and considering options like secured loans if needed. We’re here to support you every step of the way, so don’t hesitate to explore your options and find the loan that works best for you.
See Also – How Does A Personal Loan Work?
Best Loan Options for Freelancers
1. Upgrade: Best overall
To apply, self-employed borrowers must provide their two most recent tax returns.
Ratings
Trustpilot: 4.5/5, based on over 40,000 reviews. A significant majority, 81%, have given Upgrade a 5-star rating, praising its ease of use and fast funding.
Better Business Bureau (BBB): A+ rating for business practices, with an average customer review score of 4.5/5.
Features of Upgrade Loan:
Interest Rate: 7.99% – 35.99% APR
Loan Amount: $1,000 to $50,000 (with minimums of $3,005 in GA and $6,600 in MA)
Minimum Credit Score: 600
Minimum Income: $25,000 annually
Repayment Terms: 2 to 7 years (24 to 84 months)
Fees: Origination fee of 1.85% to 9.99%
Discounts: Available for autopay and direct pay
Funding Time: As soon as 1 business day
Availability: Available in all states
Pros and Cons of Upgrade
Benefits for Self-Employed Borrowers
Upgrade offers several benefits that make it an attractive option for self-employed individuals:
Accessibility: With a minimum credit score requirement of 600, Upgrade is accessible to borrowers with fair credit.
Flexibility: The option for secured loans can be beneficial for those who need collateral-based financing.
Speed: Funds can be received quickly, which is crucial for urgent financial needs.
Repayment Flexibility: Borrowers can choose repayment terms that fit their financial situation.
Considerations:
For self-employed applicants, it’s important to have necessary documentation ready, such as recent tax returns, to verify income. Upgrade requires the most recent two years of tax returns to be filed and on record with the IRS for loan approval. This process ensures that income can be accurately assessed for loan qualification purposes.
Overall, Upgrade provides a competitive set of features that make it a strong option for self-employed borrowers seeking personal loans.
2. SoFi : Best for excellent credit
Self-employed individuals typically need to provide proof of stable income, such as tax returns or bank statements, to be considered for a loan.
Rating:
Trustpilot: 4.3/5 (based on customer reviews highlighting ease of use and competitive rates).
Better Business Bureau (BBB): A+ rating for business practices, with an average customer review score of 4.5/5.
Features of SoFi Personal Loans
Interest Rate: 8.99% – 29.99% APR
Loan Amount: $5,000 to $100,000
Minimum Credit Score: 680
Repayment Terms: 2 to 7 years (24 to 84 months)
Fees: No origination fees or prepayment penalties
Funding Time: As soon as the same day (in some cases)
Availability: Available in all states except Mississippi.
Pros and Cons of SoFi
Benefits for Self-Employed Borrowers
SoFi offers several features that make it a great option for self-employed individuals:
No Fees: With no origination fees, late fees, or prepayment penalties, SoFi is a cost-effective option for borrowers.
Large Loan Amounts: Self-employed borrowers with strong financials can access loans up to $100,000, which is higher than most competitors.
Unemployment Protection Program: If you lose your income, SoFi temporarily pauses payments and provides career support to help you get back on track.
Free Financial Planning Services: Access to financial advisors can help self-employed individuals better manage their finances and plan for the future.
Considerations
Self-employed borrowers may need to provide additional documentation to verify income, such as tax returns, profit-and-loss statements, or bank statements. SoFi’s higher credit score requirement (680+) may also make it less accessible for those with fair credit.
SoFi is an excellent choice for self-employed borrowers with strong credit and stable income who need large loan amounts or value additional perks like financial planning and unemployment protection. However, those with lower credit scores or smaller borrowing needs may want to explore other lenders like Upgrade or Avant.
3. Best Egg : Best secured loans
Best Egg accommodates borrowers across different employment types, including salaried professionals, self-employed individuals, and retirees. It’s a good idea to confirm with them what documents you’ll need to submit.
Rating:
Trustpilot: 4.8/5 (based on customer reviews highlighting fast funding and competitive rates).
Better Business Bureau (BBB): A+ rating for business practices.
Features of Best Egg Personal Loans
Interest Rate: 6.99% – 35.99% APR
Loan Amount: $2,000 to $50,000
Minimum Credit Score: 600 (though 640 is often cited)
Repayment Terms: 3 to 5 years (36 to 60 months)
Fees: Origination fee of 0.99% to 9.99%, late fees, and unsuccessful payment fees
Funding Time: As soon as 1 to 3 business days after approval
Availability: Available in all states except DC, IA, VT, and WV.
Pros and Cons of Best Egg
Benefits for Self-Employed Borrowers
Best Egg is a solid choice for self-employed individuals due to its flexibility and features:
Secured Loans: Best Egg offers secured loans using vehicles or home fixtures as collateral, which can provide lower APRs and larger loan amounts. This is particularly beneficial for those who need collateral-based financing.
Fast Funding: Funds can be received quickly, which is crucial for urgent financial needs.
Debt Consolidation: Best Egg allows direct payment to creditors, simplifying debt consolidation.
Flexibility: Offers a range of loan amounts and repayment terms, accommodating different financial situations.
Considerations
For self-employed applicants, it’s essential to have documentation ready to verify income, such as recent pay stubs or tax returns. Best Egg considers income and debt-to-income ratio in the approval process, so ensuring a stable financial profile is important. Additionally, while Best Egg is highly rated, its origination fees and lack of discounts may impact overall cost and savings compared to other lenders.
4. Upstart :Fast personal loans for all credit types
If you’re self-employed, you’ll need to provide your full tax return from the previous year. Along with that, you’ll also need to submit proof of your recent income. This can be done by sharing an image of a digitally deposited check or a business invoice. Make sure these documents are clear and up to date to ensure a smooth process.
Upstart Ratings
Trustpilot: 4.9/5 (based on over 49,800 reviews as of January 2025, highlighting quick and easy application processes).
Better Business Bureau (BBB): A+ rating for business practices, but customer reviews on the BBB website are significantly lower, averaging 1.23 stars.
Features of Upstart Personal Loans
Interest Rate: 6.70% – 35.99% APR
Loan Amount: $1,000 to $50,000 (minimum loan amounts vary by state: GA $3,100, MA $7,000, OH $6,000, NM $5,100)
Minimum Credit Score: 300
Repayment Terms: 3 or 5 years (36 or 60 months)
Fees: Origination fee of 0% to 12%, late payment fees, returned payment fees
Funding Time: As fast as the next business day after approval
Availability: Available nationwide
Pros and Cons of Upstart
Benefits for Self-Employed Borrowers
Upstart provides unique advantages for self-employed individuals:
Flexible Approval Criteria: Self-employed borrowers benefit from Upstart’s use of alternative data like work history and education, which can compensate for fluctuating income or limited credit profiles.
Low Minimum Income Requirement: With a minimum income threshold of $12,000 annually from various sources (e.g., self-employment, Social Security), Upstart is accessible to a wide range of borrowers.
Fast Funding: Funds are disbursed as quickly as the next business day after approval, which is essential for urgent financial needs.
Secured Loans Option: Self-employed borrowers can use collateral like vehicles to improve approval chances and secure lower rates.
Considerations
While Upstart’s innovative approach makes it accessible to those with nontraditional financial profiles, borrowers should be aware of its high origination fees and limited repayment term options. Self-employed applicants may need to provide additional documentation to verify income sources.
Upstart is an excellent choice for self-employed individuals who may struggle with traditional lending criteria. Its AI-driven model offers flexibility and accessibility but comes with higher fees and APRs compared to some competitors. Borrowers should weigh these factors carefully before applying.
5. LendingClub : Best online experience
If you’re self-employed, you’ll need to provide proof of income by submitting your latest tax return or alternative documents like a 1099 form.
Ratings
Trustpilot: 4.7/5 (based on customer reviews highlighting fast application processes and good customer service).
Better Business Bureau (BBB): A-rated for business practices.
Features of LendingClub Personal Loans
Interest Rate: 9.57% to 36.00% APR
Loan Amount: $1,000 to $40,000
Minimum Credit Score: 600
Repayment Terms: 3 to 5 years (36 to 60 months)
Fees: Origination fee of 3% to 8% of the loan amount, late fees
Funding Time: Typically within 2 to 4 business days after approval
Availability: Available in all 50 states.
Pros and Cons of LendingClub
Benefits for Self-Employed Borrowers
LendingClub offers several benefits that make it a viable option for self-employed individuals:
Joint Applications: Self-employed borrowers can apply with a co-borrower to potentially secure better rates or improve approval chances.
Debt Consolidation: LendingClub allows direct payments to creditors, simplifying debt consolidation.
Flexibility: Offers a range of loan amounts and terms, accommodating different financial situations.
Considerations
Self-employed applicants should be prepared to provide documentation to verify income. While LendingClub is accessible to those with lower credit scores, its high origination fees and maximum APRs may increase the overall cost of the loan. Borrowers should weigh these factors against the benefits of joint applications and direct creditor payments.
LendingClub is a solid choice for self-employed borrowers who need flexibility in their loan applications, especially those who can benefit from adding a co-borrower. However, the high fees and APRs mean it may not be the best option for everyone, particularly those seeking lower-cost loans.
6. Avant – Best for debt consolidation
For self-employed individuals, Avant requires the submission of your official tax documents from the past two years to move forward with the process.
Ratings
Trustpilot: 4.7/5 (based on customer reviews praising its user-friendly application process and accessibility for borrowers with lower credit scores).
Better Business Bureau (BBB): A+ rating for business practices, but customer reviews average 1.2/5, citing issues with fees and customer service.
Avant is a popular online lender that caters to borrowers with fair or poor credit, offering flexible personal loan options. It is well-suited for individuals who may not qualify for loans from traditional lenders due to lower credit scores.
Features of Avant Personal Loans
Interest Rate: 9.95% – 35.99% APR
Loan Amount: $2,000 to $35,000 (minimum loan amounts may vary by state)
Minimum Credit Score: 550
Repayment Terms: 2 to 5 years (24 to 60 months)
Fees: Origination fee of up to 4.75%, late payment fees, and dishonored payment fees
Funding Time: As fast as the next business day after approval
Availability: Available in most U.S. states, but not all.
Comments
Post a Comment