Self Employed Loans

Funding to help support your self-employed venture from £1,000 to £500,000.

GET A QUOTE

   4.5/5

Over 90% of businesses recommend us.

We help support British Businesses
We are official members of the NACFB
We are official members of the FSB

What are self-employed business loans?

As a self-employed person, some lenders will deem you too ‘risky’ to borrow cash; that’s why securing finance can be tricky. But a self-employed loan could be the funding solution you’ve been looking for; they’re specifically tailored for the self-employed.

A self-employed business loan can give your business a cash injection you can use for almost anything to do with your business, from expanding into new markets, hiring staff or paying rent and bills for your business premises. Self-employed finance can open up a whole world of growth opportunities for you and your business.

Self-employed loans can be categorised into secured and unsecured loans; with one being riskier than the other. Read on to find out more about your self-employed finance options.

What are self-employed business loans? How do self-employed loans work? What can you use a self-employed loan for? What are the advantages and disadvantages of self-employed loans? What types of self-employed business loans are available? Can I get a self-employed loan if I have bad credit? How can I apply for a self-employed loan? What expenses can I claim as self-employed? Can I compare self-employed loan providers? Am I eligible for a self-employed business loan? Why choose Capalona?

How do self-employed loans work?

Self-employed finance can be a short or a long-term financial solution, with some lenders loaning out funds for up to 30 years. And they work much like any other loan type in that you pay the loan back with interest over a set period in monthly instalments.

You can lend anywhere between £1,000 to £500,000 – it all depends how much you need to borrow and the financial health of your business.

All lenders will require either collateral (if it’s a secured business loan) or a solid business credit history (for an unsecured business loan).

Ready to compare lenders? Get your quote now.

What can you use a self-employed loan for?

You can use it for anything to do with your business. If you were hoping to spend your loan on personal items, you might be best looking at a personal loan.

From paying the rent for your office space to hiring staff, you can spend your loan on all kinds, including:

  • business equipment (tools)
  • office renovation or expansion
  • reinvesting in stock
  • paying staff wages or hiring/recruiting costs
  • marketing your business (adverts, website build etc.)
  • consolidating debt

Self employed personal trainer at work

What are the advantages and disadvantages of self-employed loans?

Every loan has its advantages and disadvantages; that’s why it’s essential to research and compare loan providers to make sure you find the right fit for your business needs.

Self-employed loans can be the cash injection you need to achieve your business goals quickly, but they can come with some drawbacks, too. Read below to find out more.

Advantages

You can spend it on all kinds – your loan can cover a variety of things, from expanding your business to buying stock.

They’re flexible – you can choose between secured and unsecured, and payment terms can be either short or long-term.

Access much-needed cash – with loan amounts from £1,000 up to £500,000, make your business dreams a reality.

Disadvantages

They’re high risk. If you’ve secured a loan with your property and fail to make repayments, you could lose your house.

They can be expensive – if you’ve opted for an unsecured loan, interest rates will be high.

They can damage your credit score – as soon as you miss one payment, your credit score could be affected.

What types of self-employed business loans are available?

We’ve already briefly discussed secured and unsecured loans, but what are your other finance options? Read more about each below.

Own personal funds or retained profits

Retained profits can be a great way to reinvest in your business. You can only take advantage of retained profits if your business is profitable. If your company has a positive net income, you can choose to reinvest the profits back into your business.

Retaining this income means you can spend it on funding business expansion, paying wages or reinvesting in stock, without taking out a business loan.

For example: Let’s say you purchase stock for £500. You sell the stock for £1,000, so you’ve made £500 worth of profit..

You could use some of this profit to pay employees, hire new employees or perhaps reinvest in more stock.

Unsecured business loans

For an unsecured loan, lenders look at your business finances and your credit score. As this loan isn’t secured with collateral, you need to provide evidence that you can realistically pay the loan repayments.

Secured business loan

For a secured loan, the lender will require some collateral to secure your loan. Collateral is usually a property, usually your home. Securing the loan this way lowers the risk to the lender, but it increases your risk. If you’re confident your business can afford to pay back the loan then, by all means, apply for a secured loan. If you’re not sure, read below for more finance options.

Credit cards

You know what a credit card is, most of us have them. But a business credit card can offer some great benefits, including 0% APR (annual percentage rate). Although this percentage might sound enticing, it’s essential to be aware that after an introductory period, the interest rates can skyrocket.

Credit card providers also offer enticing deals for newcomers, but make sure you look beyond that to figure out just how much you’ll be paying in total.

Hire purchase or leasing

When you think of hire purchase or leasing, you think about buying a car, but it doesn’t just serve the car industry. Instead of parting with a large sum of money all at once, you could consider hire purchase or leasing assets for your business instead of buying them outright.

With hire purchase, you put down a deposit, which is usually 10% or more of the overall price of the asset you wish to purchase and pay off the remaining balance over a period of time (between one and five years). The final payment gives you the chance to own the asset in full.

Hire purchase would be useful for smaller assets, while you might want to consider leasing for the more considerable assets, leasing is viewed more as a rental agreement.

Can I get a self-employed loan if I have bad credit?

Yes, you can. If you’re self-employed and have poor credit history, you might have noticed that not all lenders will accept applications from you. But we work with a variety of lenders, so we’re confident we can help you find the best loan option for you, even if you do have bad credit.

Read more about our business loans for bad credit.

How can I apply for a self-employed loan?

Applying for a self-employed loan is straightforward. Start by filling in our short quote form, and we’ll process your application quickly. You’ll then receive quotes from our suitable lenders either straight to your inbox or via phone.

You are under no obligation to accept any quotes.

Information you’ll need when applying:

  • your name and address for the past three years
  • tax return calculation (SA302) and bank statements (both can be found in your HMRC account)

What expenses can I claim as self-employed?

You can claim a variety of expenses as a self-employed person, we’ve listed the most common expenses, but you can visit the gov.uk site for a full list.

  • office, property and business equipment (computers etc.)
  • fuel, parking and other travel expenses
  • marketing subscriptions (e.g. website costs)
  • financial and legal costs (e.g. insurance costs)
  • business-related training courses

Can I compare self-employed loan providers?

Yes. At Capalona, we gear ourselves toward helping businesses just like you find the best loan deal possible.

You need a loan offer that suits your business’s individual needs, and comparing lenders is the only way to find the best fit.

We always aim to get you at least one lender quote for you to compare against others. This quote process is entirely free, and you’re under no obligation to accept any quote offered by any of our lenders.

Get your quote today.

Am I eligible for a self-employed business loan?

If you meet the below criteria, your business might be eligible for a self-employed business loan.

You must:

  • be registered with HMRC
  • have been trading for at least six months (some lenders require two years of trading)
  • be aged 18 or over
  • have a monthly turnover of at least £5,000 (or card sales that equate to the same amount)

Why choose Capalona?

We’re a broker, and that means our loan comparison service is completely free for you to use and we can introduce you to the best UK lenders for your business financial needs.

We know searching for finance is tedious, and that’s why we’ve created a simplistic comparison service, so you can focus on running your business.

Get your quote today.

Fleximize logo
Iwoca logo
liberis logo
ldf logo
bibby financial services logo
365 business finance logo