Self Employed Loans In South Africa

What is Self Employed Loans?

As a self-employed person, you can get a secured or unsecured loan.

The difference between them is that the secured loan requires the active repayment of the loan.

unsecured business loans for self-employed, on the other hand, do not require collateral but usually have a higher interest rate.

Self Employed Loans In South Africa?

How to Use a Loan for Self-Employed Workers

You can use it to cover unforeseen financial situations;

You can get a personal loan if you need to pay for home renovations;

You can use money as capital to start your own business;

The loan can be used for debt consolidation.

Benefits of Loans for Self-Employed

You can use this loan to meet your financial needs, such as business or personal expenses. This type of loan is also great for emergencies as some freelancers have quick payments. For your convenience, there are many lenders. If you’ve had trouble getting extra money in the past, find a product that’s right for you.

Loans for self-employed workers

Several online lenders do business with self-employed workers. Here are three examples.

  • Payoff — Payoff specializes in credit card debt consolidation. You can borrow up to R556908.05to consolidate your credit card balances into one fixed monthly payment. Payoff uses your tax return and Schedule C to verify income. Payoff may also request recent bank statements for bank accounts where you receive income.
  • Upgrade — Upgrade is an online lender that offers unsecured installment personal loans of up to R795582.92 for home improvements, major purchases and more. For self-employed workers, Upgrade asks for two years of full tax returns including Schedule C, tax transcripts from the IRS and bank statements for the last 40 days.
  • SoFi — SoFi is an online lender that will lend up to R1591165.85in an installment loan to cover medical procedures, debt consolidation, home improvements or relocations. If you’re self-employed, SoFi looks at your credit scores, education, financial history and monthly income against expenses to help make a decision. A co-signer may also help you get an approval

How does a personal loan for self-employed people work

You may be eligible for either a secured or unsecured loan as a self-employed person. The main difference between the two is that a secured loan involves providing collateral. Alternatively, an unsecured loan does not require any security, but the interest rate is typically higher.

Self-employed loans have the following characteristics:

  1. The loans have flexible payment terms, from 6 up to 72 months; the monthly repayment schedule of your loan can be set according to your budget.
  2. You can borrow an amount that ranges from R2 000 to R300 000: Credit providers typically consider your income history when determining how much you can afford.
  3. The interest rates are customized according to your personal risk profile: If you have already established a good credit score, you will be able to get a lower interest rate.
  4. The application process is straightforward: Online applications are typically approved without requiring you to visit the lender’s office.

What type of loans are available for self-employed people

  1. Personal loans

If you are self-employed, you can choose between a secured and an unsecured loan. Personal loans in South Africa usually require the lender to check your credit history before issuing the loan amount.

  1. Home loans

You can take out this loan to purchase your dream home even if you do not hold a formal job. The lender will conduct a thorough assessment of your finances in order to determine whether you can afford such a  loan.

  1. Self-employed loans fast payout

These types of loans are obtained online.  There is no lengthy documentation to fill out The lender usually only needs proof of income to confirm your ability to pay back the loan.

  1. Vehicle finance

Prospective applicants can get a secured or unsecured car loan if you need to finance your vehicle.

What are the requirements for taking out self-employed loans

Whenever you apply for a loan as a self-employed person, it is imperative to show the lender that you will be able to repay the loan. You may need to meet the following requirements in order to apply for such a loan:

Personal loans for the self-employed

Self-employed individuals who need a loan might need to provide and meet the following requirements. 

  1. Prospective applicants must have a valid South African bank account that receives a regular income;
  2. Applicants should have a valid South African ID;
  3. Proof of income such as your most recent bank statements; and
  4. Proof of residence – you can use a utility bill.

Home loans for the self-employed

Are you self-employed and in need of a home loan? The following requirements are essential to ensure approval. 

  1. A declaration of all your finances and assets;
  2. Your most recent IT34 from SARS;
  3. A letter confirming your average monthly income preferably from your auditor; and
  4. Have a deposit amount ready.

Vehicle finance loans for the self-employed

Self-employed loan applicants in need of vehicle finance must;

  1. Have a deposit amount ready;
  2. Be a holder of a valid South African driver’s license.

In general, lenders use this information to determine whether or not you can comfortably pay back the loan. In accordance with the National Credit Act, all regulated credit providers must practice responsible lending. Therefore, the amount you can borrow depends on your income.

Application process

The application process for self-employed loans is similar to that for regular loans for employed people. Although the application process may take longer since the lender needs more time to verify your ability to repay the loan on a monthly basis.

Most lenders offer an easy and fast online application process. The process generally involves uploading the required documents and completing the online application. Following your application, all you need to do is wait for the lender to respond. You’ll receive a loan offer if you qualify.

Where can you get a loan for the self-employed

Below are some lenders who offer loans for self-employed people:

  1. Capitec

Self-employed individuals who receive their salary directly from their business can borrow up to R250 000. Nonetheless, informally self-employed people like freelancers and sole traders might not be eligible to apply.

  1. Standard Bank 

For self-employed individuals, Standard Bank offers vehicle and home loans. The owner of the business will need to provide financial statements, as well as a statement of assets and liabilities.

  1. Wonga

Prospective applicants can borrow short-term funds of up to R4000 as a new customer and up to R8000 if you’re an existing customer.

  1. Nedbank 

Nedbank self-employed loans range from R2000 to R300 000 if you have a monthly income of more than R3 500.

  1. Absa

When you have a regular monthly income of R2000 or R1500 on your bank statements, you can qualify for a personal or smaller personal loan.

  1. FNB 

 If you qualify, you can borrow up to R300 000.

Can I get a loan if I’m self-employed in South Africa?

If you are a self-employed person or independent worker you can apply for a loan on your own in African Bank and obtain up to R 20 000 but also minimums of R 500.

The amount chosen will exclusively depend on your monthly salary which is an approximation of how much you earn and your credit record.