What Can a Freelancer Do To Qualify for a Loan?

Being a freelancer comes with many perks; for one, you are the boss of your business and can work on your terms. From deciding your hours to charging the client for your effort, freelancers have much more freedom over their work. Freelancing has its advantages and disadvantages.

Since freelancers have contractual or project-based clients, they have no fixed monthly salary. This means some months may be slower than others, leading them to seek financial help.

So what options are available for freelancers if they want to seek a loan? The lenders are cautious about accepting loan requests from individuals who don’t have fixed earnings. But you can take precautions to increase your chances of getting accepted.

Measures To Take To Increase Your Chances of Qualifying for a Loan

Getting accepted for a loan as a freelancer isn’t the most straightforward task, but it’s not impossible. Your best bet is to assure the bank or lender that you can repay the loan with sufficient documents. Here are some steps to take to prove that you can indeed pay off the loan:

  1. Good credit score and history

Lenders may look favorably at your loan request if you have a good credit score and your history shows you have experience handling such debts. With a good credit score, you can also negotiate lower interest rates. However, before applying for a loan, it’s better to review your credit history report to ensure there are no discrepancies or inconsistencies.

  1. EPF contributions

It’s always a good idea to contribute to your EPF account for different reasons. For starters, it shows your lenders that you have a stable income. Moreover, it also proves that you have good money and finance management skills.

  1. Pay your taxes on time

While most of us dread taxes, we must handle them with care. Lenders ask freelancers to submit their tax returns for a few years to see if their income is stable. Paying off your taxes on time also indicates to potential lenders that you have a steady income and can handle finances well. It would also add credibility to your assurance that you can manage finances and responsibilities wisely.

  1. Current account

You must already have a savings account. But as a business owner, having a current account in a bank will be very advantageous for you. Existing accounts can handle transactions with more significant amounts and receipts compared to savings accounts. You can also receive short-term borrowing facilities or overdrafts if your business needs them. This stability gives lenders a reason to approve your loan application with ease.

  1. Selecting the right lender

The terms and conditions and interest rates will differ according to the lenders. Traditional lending institutions are everyone’s first choice, but if you don’t fare well with them, you can still get a loan from a private lender. Numerous private lenders are available in the market, so it’s essential to research them before choosing one lender.

  1. 1099 worker loan programs

Various 1099 income loan programs are available for freelancers and small business owners. Try looking them up before deciding which type of loan you wish to apply for.


Many options are available in the market if you are a freelancer needing financial aid. You may have to put in extra effort to get your loan application approved, but it’s not an impossible feat. We hope this helps you understand the process better and take necessary precautions to increase your chances of getting accepted for a loan. This might even help you negotiate better terms with the lenders if they approve your application.

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