Credit for the self-employed: that’s what matters!Uncategorized
These difficulties exist with a loan for the self-employed
According to the Federal Statistical Office, around 4 million people are self-employed. In many cases, the income situation is irregular, business is sometimes better and sometimes worse. This professional group is therefore considered a risk factor for banks and lenders, because the payment of the monthly loan installment can be lost in a difficult business situation. It is particularly difficult for newcomers and start-ups to get a loan for the self-employed because they cannot provide data and experience on income, only forecasts.
The industry in which self-employment is exercised also plays a role in lending. Doctors and pharmacists generally have fewer problems getting a loan from banks than a freelance craftsman or taxi driver.
Good to know: Anyone who does not work in an employee or apprenticeship relationship is considered self-employed. You can be self-employed either as a freelancer or as a trader. According to the income tax law (EstG § 18) count as freelancers such. B. Doctors, lawyers, journalists, tax consultants, interpreters and others who work independently. In contrast, a trader is someone who works in the field of handicrafts, industry, restaurants or trading companies. In case of doubt, the responsible tax office decides on the assignment to one of the two groups.
Which loans for self-employed and freelancers are there for private use?
In the case of the self-employed, a basic distinction must be made between loans for private use and for business purposes. Below we describe different types of credit that are eligible for private use.
Installment loan for the self-employed
A classic installment loan is the most common form of borrowing. You get a loan and pay interest on it. Your creditworthiness, also known as creditworthiness, is important. If this is limited or not available, banks charge higher interest rates or refuse a loan. The best way to find a cheap loan is with our installment loan comparison. Some banks such as Lite Bank or the Good Finance offer loans up to $ 35,000 for free use especially for self-employed persons.
Framework credit for the self-employed
With a credit line, you receive a certain credit line from the bank, which you can call up, even partially, if necessary. It is similar to an overdraft facility. However, the interest is higher than with an installment loan.
Instant credit for the self-employed
An instant loan (also called a lightning loan) is a special form of installment loan. It is interesting for the self-employed because a decision is made within a few moments whether a loan approval is possible or not. The payment of the money is also much faster, depending on the bank, possibly within a day.
Self-employed car loan
The same conditions apply to a car loan as to an installment loan. However, the chances for the self-employed are better because there is security in the car that reduces the bank’s risk.
Small loan for the self-employed
A small loan is taken out for a small amount, usually up to $ 3,000 or a maximum of $ 5,000. Since the amounts are rather small, self-employed people also have a good chance of getting a loan agreement. But there must be a regular income and it must be proven. There is also the option to apply for a mini loan. With this special form, loans of several hundred USD are granted.
Personal loan for the self-employed
Private individuals can also grant loans. These personal loans (also called peer-to-peer or P2P loans) are brokered via online platforms that combine supply and demand. The advantage for the self-employed: Here it is also possible to grant loans with a poor credit rating. However, relatively high interest rates are then required.
Overdraft facility for the self-employed
Current account holders often also have a corresponding overdraft facility. This is a credit line that can be used in the checking account. In the case of the self-employed, this form is called current account credit. The disadvantage here is very high interest rates.
Which loans for self-employed and freelancers are there for business purposes?
A distinction can be made between two types of credit for loans used for business purposes. It is either a working capital loan that is used, for example, to finance goods. Or it is an investment loan. This is used to pay for goods for the company, such as machines or the vehicle fleet. As a self-employed person, you have the following options to apply for one of these loans.
Promotional loans for the self-employed at Cream bank
The Cream bank is the national development bank. It pursues the promotion of medium-sized and start-ups as well as the financing of infrastructure projects and housing construction. With programs such as “ERP start-up credit” and “Cream bank business credit”, it is aimed specifically at self-employed people and start-ups. The loans are granted at low interest rates and with repayment-free start-up years.
State microcredit for the self-employed
It is an offer from the state microcredit fund Germany, in which only entrepreneurial activities are financed. Depending on the situation, the initial loan can be, for example, $ 1,000 or $ 10,000. If the first loan is repaid without problems for 6 months, a second loan can be applied for. The total credit volume may not exceed $ 25,000. You must apply for a microcredit from the relevant microfinance institute.
Promotion of the federal states
In addition to the federal funding options, there are also federal loan programs that support the self-employed. These include, for example, the Berlin and Schleswig-Holstein investment banks, which grant microcredit up to $ 25,000 with a simplified application process and without the usual collateral.
Corporate loans from banks and specialized providers
Banks and savings banks also advertise offers specially tailored to the self-employed and entrepreneurs. This is illustrated by a few examples.
- Cream bank is promoting an investment loan for new machines or vehicles with a 10-year term of between $ 25,000 and $ 750,000.
- The savings banks offer the self-employed the possibility of using a current account overdraft in the context of business accounts.
- Online platforms such as Agree Bank and Good Finance broker special corporate loans. The target group here are in particular medium-sized companies and freelancers.
This is how it works with the loan for the self-employed
The question of which bank gives a loan to the self-employed cannot be answered simply. In many cases, it is advantageous to ask for a loan at the house bank, where the company account is already running anyway. With a glance at the current account details, it is often possible to quickly assess whether there is a chance of getting a loan for the self-employed.
So that there is no loan rejection when you are looking for a loan for freelancers or that you have to pay very high interest rates, we have some tips for you that will help you with the loan request. In all cases, the aim is to provide the bank with collateral that you can use to offset irregular business income.
Tip 1: A guarantor assumes your debts in the event of default
A guarantor undertakes to assume another person’s debts if they can no longer pay the debts on their own. This guarantee can be given both by a private person – such as a family member – and a guarantee bank. These are government-sponsored development banks with the aim of supporting the self-employed and freelancers in financing their business. Guarantee banks exist in every federal state.
Tip 2: A second borrower increases your chances of getting a loan for the self-employed
With a second solvent borrower, you offer the bank another person who is responsible for repaying the loan. In addition, the monthly income available for repayment increases. Lending at low interest rates is therefore more likely.
Tip 3: Banks like to see collateral
Any type of assets can serve as security for the bank. No matter whether it is business equipment, company cars, private savings, shares or life insurance. If assets of this kind can be brought in, the risk of default for the bank is reduced. The more collateral you can offer, the more likely lending and low interest rates will be.
Tip 4: Contracts and declarations of intent make forecasting easier
Especially in the start-up phase, the self-employed are often unable to provide concrete past figures that support business development. Banks then often shy away from the risk of granting a loan without a reliable number base. Asking prospective customers for a letter of intent can help. Your future customer explains that he wants to buy your service or products in the next few months. Or contracts have already been signed to show that you can count on income. For the bank, these contracts and declarations can indicate that business is going well in the future.
Loans for the self-employed: What are the requirements?
The self-employed have to meet other requirements for a bank to pay you a loan. We have summarized here what you need to look out for with a loan for the self-employed and what requirements should be met.
Requirements for a loan for the self-employed
- 2-3 years self-employed
- Self-employment income
- Collateral such as company cars or private assets
- no negative Credit Bureau entries
- the necessary documents (this includes bank statements and tax assessments – a detailed list can be found below)
- Residence and bank details in Germany
- Legal age
Is there a loan for the self-employed without Credit Bureau?
No, there will generally not be a loan without Credit Bureau or without proof of income. Banks are required by law to always check a person’s creditworthiness (creditworthiness) before granting a loan. This applies to a loan in the private sector as well as to a loan for freelancers or a business start-up loan. Checking the creditworthiness includes, firstly, the demand for the Credit Bureau score, which reflects the risk of default, and secondly, checking your income.
Good to know: There are providers for loans without Credit Bureau. In these cases, loans are granted to the self-employed even if there is a negative Credit Bureau entry or the credit rating is not used at all. The big disadvantage is that very high fees and interest are due – the loan is very expensive. In the worst case, you get a loan rejection and still have to pay high fees.
Checklist for applying for a self-employed person: documents for the bank meeting
If you want to apply for a self-employed loan, the bank needs a number of documents to help you calculate your actual income. You should submit the following documents to your bank together with the loan application:
- the last three bank statements (replaces the employees’ pay slips)
- the business evaluation (BWA)
- Income / surplus statement or income statement
- if applicable, income tax assessments from the past three years
- Balance sheets and annual accounts
- Business plan (entrepreneurs, start-ups)
- Proof of payment of health and pension insurance amounts as well as other insurance documents