Being your own boss comes with lots of privileges—freedom and flexibility, as well as financial independence. Yet quick sourcing of funds is not always easy. Compared to salaried income entrepreneurship usually undergoes more scrutiny. Hence, it's essential to choose the best loan app for self-employed people. Whether you are looking to expand your business, manage cash flow, or make urgent purchases, the right loans for self employed can make all the difference. In this blog, we will unravel everything related to eligibility criteria, the important documents required, and those behind-the-scene factors that lenders actually consider so that you can easily secure the loan
Personal Loan for Self-Employed: Eligibility Criteria
As you begin your research on getting the best low-interest personal loans, the first question that you are bound to encounter is how to get a personal loan for a self-employed individual. While checking personal loan eligibility depends on various factors, the key points to consider are:
- Your credit score is a significant factor in determining your eligibility for an instant personal loan online. A higher credit score increases the chances of your application being approved.
- For self-employed individuals, lenders typically look for a stable source of income to ensure you can repay the loan.
- You must usually be a legal adult in your country to qualify for a personal loan. Lenders may also require you to be a permanent resident or citizen.
- Make sure applicants have all documents and address proof, such as a bill or rent agreement.
- Some lenders often look for applicants who have years of established business.
- Lenders look for the debt-to-income ratio to make sure applicants are eligible to repay the amount.
Documents Required for Personal Loan for Self-Employed
The documents required for a personal loan for the self-employed individual are as follows:
- Identity verification documents include a driving license, PAN card, voter ID, passport, and Aadhaar card.
- Proof of address such as Aadhaar cards, passports, evidence of residency, and utility bills (electricity, gas, and water).
- Proof of income includes the last two years' ITR, the current and savings account statement from the previous year, the audited balance sheet, and the P&L statement.
- Proof of business such as incorporation letter, real estate records, proof of business address, proof of business continuity, and proof of vintage
Factors affecting a loan for Self-Employed
If you're self-employed, getting a loan isn’t just about meeting eligibility criteria—it’s also about how lenders perceive your financial stability and risk. Here are the key factors that can influence loan approval:
- Self-employed professionals often have variable income, so lenders look to see whether applicants have consistent earnings over the past few years or not.
- Most lenders prefer a business track record of at least 2–3 years. A well-established business shows credibility and lowers perceived risk.
- Lenders assess your business’s financial health by checking profit and turnover trends.
- Your bank statements reveal a lot—regular deposits, minimal overdrafts, and healthy account balances reflect good financial management.
- For self-employed borrowers, lenders typically require Income Tax Returns (ITRs) for the last 2–3 years.
- The type of business you run can impact risk evaluation. Lenders may consider some sectors (like seasonal trades or high-risk industries) less stable, which could affect loan terms or approval.
- Lenders will review your credit history, including previous loans, total borrowed amounts, and repayment history. Each of these metrics can influence the approval of your loan application.
How to Apply for a Personal Loan for Self-Employed
Follow these steps to apply for a Viva Money personal loan for self- employed:
- Download the Viva Money from the app store or the Play store
- Log in with your mobile number
- Get your approved credit limit
- Add your PAN & Aadhaar details
- Complete KYC verification
- Get instant approval and access funds anytime, anywhere
What is the Average Interest Rate for a Personal Loan for Self-Employed?
The average rate of interest on a Personal loan can be as low as 3% and can be as high as 20%. It usually depends on the EMI tenure, your creditworthiness, and other details. Therefore, if you're going for low-interest personal loans, you should check all the required boxes.
A low-interest personal loan is not just a backup; it remains one of the key levers that can be used to advance your business. Take advantage of its availability as a method to finance business development to pay for necessities or repay existing liabilities. Thus, if used wisely, your loan is a powerful tool that will allow you to achieve new goals and build a protective shield around your financial activities.
Conclusion
It is entirely possible for the self-employed to obtain a personal loan; however, it may prove a little challenging as compared to the employed candidates. Therefore, knowing the environment, being ready to offer your best, and choosing the correct lender can get the required financing for growth. Step into the world with confidence, take control of your finances with the best loan app for the self-employed, and watch your entrepreneurial dreams come true.
