Financing for freelancers – Self-employed loan

Financing for freelancers – Self-employed loan

The self-employed and freelancers are not welcome customers at banks when it comes to loans. Financing for freelancers is accordingly difficult to obtain. Many banks have completely excluded self-employed and freelancers from lending. We have researched the topic and offer information on how to get financing for freelancers.

Time and patience are required

Time and patience are required

Time and patience are required when it comes to successfully completing financing for freelancers. The first step is to find the banks that are willing to lend to freelancers. The problem with lending is not due to the freelancers themselves, but to the fact that freelancers as well as the self-employed cannot prove regular income from a permanent position. That makes freelancers a risk group. Many banks do not want to buy the risk. If it is still possible to get a loan for freelancers, then it is on much worse terms. The higher risk is hedged through higher interest rates.

Freelance earnings are often subject to strong fluctuations. Income is not as regular as a salary payment for employees. For this reason alone, the risk is greater from the perspective of the banks, even if freelancers work in respected professional groups. For this reason, banks value the credit default risk of freelancers much higher than that of workers. For this reason, many banks do not grant loans to the group of self-employed and freelancers.

Financing for freelancers at selected banks

Financing for freelancers at selected banks

Since at most 20 percent of all banks give freelancers the opportunity to apply for a loan, the choice is considerably limited when it comes to cheap financing for freelancers. Especially since the conditions are not as attractive due to the freelance work as for employees.

How banks check the creditworthiness of freelancers

How banks check the creditworthiness of freelancers

Credit requests from private customers now go through an automatic processing process at banks. These are standardized banking products. With the appropriate software, the Credit Bureau information is obtained from the applicants, a household bill is made and the scoring procedure is used to assess the credit default risk. The credit decisions are also made automatically if there is creditworthiness. Financing inquiries with freelancers are handled quite differently. Such requests still have to go through a manual processing process with a relatively large amount of time. Freelancers prove their income through their income tax return and a BWA.

In addition, bank information is usually obtained from the house bank and information about the company is ordered from credit bureaus such as Astro Finance. Processing not only takes a lot more time, it also costs the banks a lot more money. Appropriate staff must also be kept available. Freelancers must therefore assume that 14 days or more will pass between the application and the approval of their funding request.

Influence the decision with a guarantee

Influence the decision with a guarantee

Married freelancers or those living in a steady relationship can have a positive impact on the decision on the loan and speed it up significantly if they apply for financing for freelancers together with the partner. Always provided the partner has a permanent job with good income. The banks then put the risk on the partner with the attachable income so that the decision can be made much faster. If the partner is also self-employed, a joint application makes no sense.

Financing for self-employed entrepreneurs

Financing for self-employed entrepreneurs

Even more difficult than freelancers who have been working as freelancers for a long time are young start-ups who need financing for freelancers to get their company going. Here the higher risk of bankruptcy still hovers over the freelancer. This is why start-ups of the bank usually have to provide additional collateral if they want to take out a loan.

It is also difficult if the loan is not intended for private purposes, but for the development of the company. Start-ups have good chances of getting a loan if they have adequate equity. Nevertheless, they pay the higher risk that banks take when lending to this group of people with higher interest rates.

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