The self-employed have a hard time getting a loan. If it is still a cheap loan for self-employed, the selection is still a lot narrower, you might think. But the very fact that the borrower counts among the self-employed is not enough to justify overpriced loans. On the contrary, it is important which prerequisites he brings with him to secure the loan. The more collateral available, the cheaper the loan for the self-employed.
A cheap loan for self-employed by the bank
Banks set strict rules regarding the granting of loans. This applies in particular to the assignment to the self-employed. Because these, so the view of the banks, often have little or no reserves, with which short or long-term turnover fluctuations can be compensated. According to current opinion, cyclical problems are the first to affect the self-employed and freelancers, which is why lending to this group of people usually causes problems.
So, first of all, it’s a question of whether the bank even grants a loan before a favorable loan can be targeted. Now, the securities come into play, which may have the applicant. For this purpose, data on the company is required in the form of a business evaluation.
This allows the bank to calculate certain corporate ratios, such as profitability, cash flow and leverage, on the basis of which a credit decision can be made. The cash flow plays an important role in this because this key figure indicates which cash flows are due to the company net per period. From these, finally, the capital service, so the continuous interest and principal payments, will be made later.
The more profitable the company presents, the better the chances are that a favorable loan will be granted to the self-employed. Once a loan offer from the bank is available, it should not be accessed directly. Each offer offers a new possibility of comparison, and this must be used. In plain language, this means comparing as many offers for a loan as possible in order to select the cheapest one.
The most important feature of comparison so that a favorable self-employed loan can also be identified as such is the effective interest rate. It contains all the costs relevant to the loan and thus allows conclusions to be drawn regarding the actual borrowing costs ultimately faced by the self-employed.
Alternatives to the bank – the way through personal loans
A relatively new way to raise borrowed money, offers the personal loan. Instead of borrowing money from a bank or other bank, you borrow your money from private individuals. These seek as investors for opportunities to invest relatively small amounts profitably. As a borrower, you are confronted with several borrowers who all finance only part of their own project in order to keep the risk manageable.
This may seem rather daunting for some applicants at first, but it has the positive side effect of allowing projects with a relatively high risk to be financed comparatively quickly.
For a personal loan, you first need to register with one of the intermediation platforms on the Internet, through which the connection between the borrower and the lender is established. This is usually anonymous, the investor is only a series of credit metrics available on the basis of which he can opt for or against lending.
In the course of the application, the same information is required here as would be required for a bank loan. Especially self-employed people would do well to describe their intention to make their own project more attractive to investors. In this way, a cheap loan for the self-employed can be achieved much faster.