Self-employed Loans for Tradies

elf-employed tradies work on their own time and keep all the money to themselves. However, the money they make depends entirely on how hard and how often they work. Getting a loan can also be challenging, as many lenders require recent payslips as proof of income.

But just because it's challenging doesn't mean it's impossible to find lenders who offer loans with favorable terms for self-employed tradies who want to start a business or buy equipment and tools.

Secured and Unsecured Loans

Self-employed tradies can apply and qualify for secured and unsecured loans.

Secured Loans

With a secured loan, collateral (like house, car, land, or bond) is offered in exchange for the borrowed money. The lender keeps the deed or title until the loan is paid in full within an agreed time, but can sell the collateral if the borrower is unable to pay off the loan. The secured loan generally has lower rates, higher borrowing limits, and longer repayment terms.

Unsecured Loans

Tradies who do not want to put their property at risk can opt for an unsecured loan, which does not require collateral from the borrower but usually has a higher interest rate than that of a secured loan. The lender judges the borrower’s ability to pay based on character, capacity, capital, collateral, current financial situation and general economic factors.

Flexible Repayment Options

Since the majority of tradies do not have a regular fixed salary, self-employment loans generally offer flexible repayment options, like overpayments, underpayments and paid holidays. The loan terms can range from six months to five years or more. Monthly principal and interest repayments on the loan amount are also required.

Where to get self-employment loans

Tradies can get a loan through a specialist lender who provides personal loans for self-employed people.

They can also apply for any standard personal loan if they meet the documentation requirements as an employed person. Lenders usually have eligibility criteria, which includes the proof of a regular income. Other important documents include:

• Tax returns - At least two years of full personal and company tax returns
• Financial statements - Any profit and loss statements
• Proof of rental income from rental properties, if any
• Recent bank statements - Savings and business transactions, including any other outstanding loans or credit cards with other lenders
• Company-specific information, if you own your business
• Personal identification - Driver’s license, passport or state ID

Low Doc Car Loans

Self-employed tradies who want to get vehicle financing but have limited documents to prove their income level can apply for low doc car loans, which do not require payslips but check bank account conduct, credit history, and information about previous employments. This type of loan also has higher rates and fees than standard loans.

Can self-employed tradies with bad credit get a personal loan?

Although it can be challenging, tradies with bad credit can still get a loan through a collateral or a cosigner with a good credit score. Also called a co-applicant, the co-signer applies for the loan along with the tradie and will be checked for income and creditworthiness. He or she will also be equally responsible for paying back the debt.

Positive Lending Solutions offers self-employment loans for tradies across Australia. With access to the best deals available from the country’s leading banks and lenders, we'll find a finance solution for you. Get a quote now!