When you are in employment, you will likely need the personal loan to carry out some extras that will make life more worthwhile. If you are employed, getting the loan will be pretty easy. But for those that are self-employed, you have to go the extra mile to get approval for such loans. The following tips will be of valuable help.
Your Credit score
Make sure you work on your credit score and make sure there are no errors in it. With a high credit score, the chances of getting the loan will be enhanced. If you are applying for a personal loan, then your credit score should be on the high. If it is a business loan, your business credit score should be worked on. Make sure you make all the necessary amendments some few months to the timing of the loan.
Existing Deft Portfolio
One of the parameters that lenders will look at is your debt portfolio. If the records show that you are indebted, the chances of getting any consideration will be out of it completely. Clear all personal debts if you are targeting a personal loan. If it is a business loan, then all business debts should be cleared before putting in your application. When the lending company sees that you come in with a clean portfolio, the chances of getting the loan will be enhanced. It boils down to preparation ahead of your application. Whenever the need arises for a loan; create time to clear all your outstanding debts before you apply for the loan.
Your Length Of Time In Business
This is a factor that every lender will confirm before they grant any loan. The stats go to show that most businesses are consigned to the dustbin of history within two years of their entry into business. So if your business is not more than two years, do not waste your time applying for any business application. 405% of small businesses do not go beyond their first two years; therefore make sure your business falls within the required range. However, this criterion might be overlook if your business can show evidence of strong successes in the notch. It should not be a flash in the pan; something regular must be on the table before any business under two years can be given any form of consideration.
Your Cash Reserve
Having spoken on the fact lenders give considerations to businesses that have been in the mix for more than two years, it should be stated here that you can get results that matter even when your business is not up to two years. So how do you achieve this? Simply work on building your cash reserves. Build your cash reserves and the lenders will rate your firm high with the belief that even if when the business runs into the troubled waters, you will have something to fall back to and will be able to pay the loan even in business recession.
A Large Down Payment
There will be several applications competing with your application. It is therefore a survival of the fittest in the race to secure the loan. One strategy that you can adopt as a self employed is to save up a large amount of the loan. Then place the offer of a large down payment in your application. The lender will see you as very serious. Every lender wants to take fewer risks, with the large down payment you have succeeded in sending the signal to the lender that you are equal to the task of paying the loan back. Your application will be considered as a potential risk that will make the lender beam with smile at the end of the day.
Your Tax Write-Offs
Even where you have put all the measures listed above in place in preparation for the loan; you might still meet a brick wall because of low income of the business. This is due to tax write-offs which reduces taxable income shown on your tax returns. It is good for your business; but if you are planning to get the business loan, then you must avoid tax write-offs because it is not good for loan application. Limit the tax write-offs for your business if you want your firm to remain competitive in your bid for the loan. Talk to your tax professional about it; make him amend your old tax form to limit the long time of wait for the loan.
All that you need to put in place to get the loan as a self employed are what you have just read through above. The last thing to be considered is to make sure that you choose a credible lender. Go through their portfolio and ensure that they are credible before signing the dotted lines of the contract.