The old adage is If you’re starting out a business you typically won’t turn a profit for two years, so you may need to borrow some cash to get by. According to the Australian Bureau of Statistics, there were approximately 1 million self-employed Australians as of August last year, making up 8.2% of all employment.

If so many of us are self-employed, why then is it harder to get a personal loan? Find out here, as well as what your options are, and how to improve your chances of approval for a self-employed personal loan.


In the market for a personal loan? The table below features personal loans with some of the lowest interest rates on the market.

Lender

FixedUnsecuredN/A
More details
Loan amounts from $2k to $75k
  • No ongoing or early exit fees
  • 1-7 years loan terms. Pay monthly, fortnightly, or weekly
  • Get quick decision. Funds in 24 hrs if approved
Loan amounts from $2k to $75k

Low Rate Personal Loan Unsecured (Excellent Credit)

  • No ongoing or early exit fees
  • 1-7 years loan terms. Pay monthly, fortnightly, or weekly
  • Get quick decision. Funds in 24 hrs if approved
FixedUnsecuredN/AN/A
More details

Unsecured Personal Loan (Excellent Credit)

    VariableUnsecuredN/AN/A
    More details

    Personal Loan

      Important Information and Comparison Rate Warning

      All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here.

      The comparison rates in this table are based on a loan of $30,000 and a term of 5 years unless indicated otherwise. The comparison rates are for unsecured personal loans only for the relevant amounts and terms. The comparison rates for car loans and secured personal loans are for secured loans unless indicated otherwise. WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. Comparison rates are not calculated for revolving credit products.

      Monthly repayment figures are estimates only, exclude fees and are based on the advertised rate for the term and for the loan amount entered. Actual repayments will depend on your individual circumstances and interest rate changes. Rates correct as of May 28, 2024. View disclaimer.

      What is a self-employed personal loan?

      A self-employed personal loan is a personal loan specifically designed for sole traders or the self-employed. The loan itself functions essentially the same as a regular personal loan but the application process is slightly different. This is because self-employed people often don’t have the paperwork regular employees might have, like payslips, which many lenders require when deciding on your loan approval.

      When shopping around for loans, check each lender's lending criteria to make sure you qualify or talk to one of their lending specialists prior to applying. If you think you may need a professional to assist you, consider seeking out a specialist broker who can point you in the right direction. One of the most important things you can do to increase your chances of getting approved for a loan is being diligent with your paperwork and finances. Lenders will likely need to see at least two years of tax statements, as well as any sources of revenue and earnings you have, savings, assets, and losses.

      What types of personal loans can the self-employed get?

      There is a range of personal loan options available to the self-employed. Keep in mind, different lenders will have different lending criteria, so you may have to shop around to find the type of loan you’re after. The types of loans typically available to the self-employed include:

      • Standard personal loans: Provided you qualify, a self-employed person may be able to borrow with a standard personal loan, which can be secured or unsecured. A secured loan means the borrower provides security for the loan through an asset they own, like a car, house, or cash deposit. An unsecured loan on the other hand has no security, which is a higher risk for the lender, and typically results in a higher interest rate.

      • Specialist loans: By going to a specialist broker or lender, you may be able to take advantage of a personal loan specifically set up for self-employed people. These types of loans are often referred to as ‘personal loans for ABN holders’ and can be specialised depending on your field of work.

      • Peer-to-peer (P2P) loans: P2P lending is an unsecured loan you borrow from another group or a ‘peer’. One person applies for credit while on the other side, investors pool their money through a platform which is then lent out.

      • Low-doc loans: Low-doc is a shortened version of low documentation. These types of loans are often targeted at the self-employed, as these groups often don’t have the extensive documentation lenders require. However, due to carrying a higher risk to the lender, interest rates are often higher than with regular loans and come with more fees.

      Low doc loans and even no doc loans are also available for car loans and home loans.

      How to apply for a self-employed personal loan

      Prior to applying for a self-employed personal loan, it’s a good idea to ensure you have all the necessary paperwork a lender may require. Each lender will be different but it’s likely they’ll require most of the following:

      • Two years of your personal and/or company tax returns.

      • At least six months of financial statements from your business showing your profits and/or losses.

      • Recent bank statements showing any outstanding debts you or the business has.

      • Proof of any rental income you have accrued.

      • Personal identification like a driver's license or passport.

      • Your ABN and company’s address.

      • A Notice of Assessment from the Australian Tax Office (ATO) for the last two years.

      Once you’ve got the above, the application process for a self-employed personal loan will typically be as follows:

      1. See what types of loans are available to you from a range of lenders, and ensure you’re getting a loan suitable for your needs with a competitive interest rate and low fees. Consider talking to a lending specialist or a specialist broker.

      2. Apply for the loan, submitting all required documentation and any necessary supporting paperwork.

      3. Wait for approval, which can take anywhere from a few hours to up to a week depending on the lender. Upon approval, look over the contract to ensure everything is as agreed and your interest rate isn’t too high.

      4. Sign off on the loan and wait for the funds to reach your account.

      Who offers self-employed personal loans?

      A wide range of banks and lenders currently offer personal loans for self-employed people, including all of the big four banks ANZ, Commonwealth Bank, NAB, and Westpac. Additionally, there are a number of smaller specialist lenders, like MoneyMe and Plenti.

      Lenders often change their terms and conditions as well as their loan products, so check out the lending criteria from each of them to see whether they can lend to you.

      How to compare self-employed personal loans

      If you’re shopping for a self-employed personal loan, these are some of the things you should be comparing:

      The interest rate

      Ever one of the most important things to consider when looking for a loan, it’s vital to look at getting the lowest interest rate possible to save yourself on interest costs. Furthermore, find out whether you'll be paying a fixed or variable rate; a fixed rate provides cash flow certainty but often has stricter conditions, while a variable rate could see your interest rate rise, but tends to offer more flexibility.

      The fees

      Many personal loans come with numerous (and expensive) upfront and ongoing fees, which can negate some of the benefits of a low interest rate. Check the comparison rate to see the true cost of the loan and read the fine print to avoid any nasty surprises, and compare the main personal loan fees and how much they can cost here.

      The loan term

      Some lenders have shorter loan terms in return for providing less documentation or a fast turnaround time. Make sure you’re getting the loan term you’re after with repayments you can afford. Personal loan terms typically max out at around five to seven years, but there are a select few that can go for longer.

      The lender

      It’s harder for self-employed people to get personal loans, and some less than reputable lenders can prey on this. Payday loans in particular can be trouble for people seeking short-term finance. Read reviews for your proposed lender, consider how the customer service has been and think about getting financial advice where possible.

      The loan security

      Depending on the type of loan you get, some lenders may require you to put up security for the loan. This may or may not appeal to you depending on your situation, so find out whether it’s necessary prior to applying.

      The lending criteria

      Some lenders simply won’t lend to self-employed people. Save yourself time and effort and prevent your credit rating from taking a potential hit by checking whether you’re eligible before applying.

      The processing time

      If you’re after quick cash, then remember some lenders will have a longer turnaround time than others when assessing your application. You can ask the lender how long it typically takes them to process loans before applying.

      Alternatives to self-employed personal loans

      If you can’t get a self-employed personal loan or they simply don’t appeal to you, you can also consider taking out a guarantor personal loan. A guarantor personal loan is backed by another person, usually a family member, who will step in to make repayments on the loan should you no longer be able to.

      This added security means less risk for the lender, which will make them more likely to approve you.

      Savings.com.au’s two cents

      It’s not easy going it alone in business and lenders often don’t make it easier to access credit. One of the best ways to improve your chances of approval is having the relevant documentation and being disciplined in your finances before hitting the apply button.

      Prior to borrowing the money, make sure you plan for dips in profit or earnings. Your loan repayments will be steady for the duration of the loan, but your income might not, so make sure you have a plan in that eventuality.

      Photo by Tim Mossholder on Unsplash