How to Apply for a Personal Loan if You’re Self-Employed

A personal loan could be an option if you want to consolidate high-interest debts in one monthly payment or finance a large project like a home renovation. But qualifying for a personal loan can be a bit more complicated if you’re self-employed. That’s because the lender may ask you for documents proving your income during the application process.

For many applicants, that means providing W-2s from their employers. If you’re self-employed, you don’t have W-2s. Still, applying for a personal loan if you’re self-employed is absolutely possible. You’ll just need to have different documents ready to send if the lender asks for them.

Information to provide when you first apply for a personal loan

A personal loan application typically asks for:

• Personal information including your home contact information, birthdate, Social Security number and citizenship status.

• Financial information including annual income, income sources, and monthly housing expenses and debt obligations.

• Employment information including your employment status, current employer and length of time working there.

• Loan request information including the reason for the loan and the amount you seek to borrow.

Some lenders allow you to pre-qualify for a personal loan, meaning you can see what loan terms you’d qualify for without a hard credit inquiry. That can spare you a temporary ding to your credit scores while you weigh your options.

How to prove self-employment income

As the lender evaluates your loan application, it will request additional proof of the income information you shared with them. This is where it pays to be prepared, especially if you’re self-employed.

Have these documents on hand to prove your self-employment income:

• Federal tax returns for the past two years, including all schedules, like a Schedule C and Schedule SE.

• 1099s for the past two years.

• Bank statements.