Best Business Loans for the Self-Employed and Sole Proprietors
Banks, SBA- and online lenders offer business loans for sole proprietors and self-employed individuals.
When you’re self-employed, a small-business loan
Below, learn more about the best loan options for sole proprietors and self-employed business owners and how to get the right financing for your needs.
Who qualifies as self-employed?
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Once we uncover your personalized matches, our team will consult you on the process moving forward.
Max loan amount
$100,000
Min. credit score
625
Min. annual revenue
$100,000
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Pros
- Fast access to working capital.
- Accepts borrowers with a minimum credit score of 625.
- Streamlined application process with minimal documentation required.
- Can be used to build business credit.
Cons
- Not available in North Dakota.
- May require frequent weekly payments.
- Interest rates can be high compared with traditional lenders.
OnDeck - Line of credit
Best for Working capital needs
Max loan amount
$100,000
Min. credit score
625
Min. annual revenue
$100,000
with Fundera by NerdWallet
Pros
- Fast access to working capital.
- Accepts borrowers with a minimum credit score of 625.
- Streamlined application process with minimal documentation required.
- Can be used to build business credit.
Cons
- Not available in North Dakota.
- May require frequent weekly payments.
- Interest rates can be high compared with traditional lenders.
Max loan amount
$1,500,000
Min. credit score
570
Min. annual revenue
$240,000
with Fundera by NerdWallet
Pros
- Cash can be available quickly.
- Get a discount for prepaying.
- No collateral required.
- Low minimum credit score requirement.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Can’t build business credit.
- Longest loan term is 18 months.
- Charges an origination fee.
Fora Financial - Online term loan
Best for Bad credit
Max loan amount
$1,500,000
Min. credit score
570
Min. annual revenue
$240,000
with Fundera by NerdWallet
Pros
- Cash can be available quickly.
- Get a discount for prepaying.
- No collateral required.
- Low minimum credit score requirement.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Can’t build business credit.
- Longest loan term is 18 months.
- Charges an origination fee.
Max loan amount
$10,000
Min. credit score
300
Min. annual revenue
$18,000
with Fundera by NerdWallet
Pros
- No minimum credit score requirement.
- Same-day funding available.
- Specifically designed for freelancers and self-employed individuals.
Cons
- Funding maxes out at $10,000 ($20,000 for repeat customers).
- Factor rate and fee information not available on website.
- Charges an origination fee.
Giggle Finance - Merchant cash advance
Best for Freelancers and independent contractors
Max loan amount
$10,000
Min. credit score
300
Min. annual revenue
$18,000
with Fundera by NerdWallet
Pros
- No minimum credit score requirement.
- Same-day funding available.
- Specifically designed for freelancers and self-employed individuals.
Cons
- Funding maxes out at $10,000 ($20,000 for repeat customers).
- Factor rate and fee information not available on website.
- Charges an origination fee.
Max loan amount
$350,000
Min. credit score
600
Min. annual revenue
$50,000
with Fundera by NerdWallet
Pros
- Loan amounts from $5,000 to $350,000.
- Customized loan terms.
- No prepayment penalty.
Cons
- Slower processing speed compared with online lenders.
- Charges an origination fee.
- Not available in all U.S. states.
Accion Opportunity Fund Small Business Working Capital Loan
Best for Traditionally underserved borrowers
Max loan amount
$350,000
Min. credit score
600
Min. annual revenue
$50,000
with Fundera by NerdWallet
Pros
- Loan amounts from $5,000 to $350,000.
- Customized loan terms.
- No prepayment penalty.
Cons
- Slower processing speed compared with online lenders.
- Charges an origination fee.
- Not available in all U.S. states.
Max loan amount
$50,000
Min. credit score
620
Min. annual revenue
Undisclosed
with Fundera by NerdWallet
Pros
- Can be used for a variety of funding purposes.
- Designed to finance traditionally underserved businesses.
- Startups and business owners with bad credit may be able to qualify.
- Competitive interest rates, low fees and long repayment terms.
- Intermediaries typically offer business training and educational resources.
Cons
- Loan amounts max out at $50,000.
- Can’t be used to pay existing debt or purchase real estate.
- Collateral is likely required.
- Slow funding timeline.
SBA microloan
Best for Startups
Max loan amount
$50,000
Min. credit score
620
Min. annual revenue
Undisclosed
with Fundera by NerdWallet
Pros
- Can be used for a variety of funding purposes.
- Designed to finance traditionally underserved businesses.
- Startups and business owners with bad credit may be able to qualify.
- Competitive interest rates, low fees and long repayment terms.
- Intermediaries typically offer business training and educational resources.
Cons
- Loan amounts max out at $50,000.
- Can’t be used to pay existing debt or purchase real estate.
- Collateral is likely required.
- Slow funding timeline.
Max loan amount
Undisclosed
Min. credit score
700
Min. annual revenue
$100,000
with Fundera by NerdWallet
Pros
- Bank loan with competitive interest rates.
- No collateral required.
- Bank of America’s Preferred Rewards program can offer interest rate discounts and other perks.
Cons
- Can be slow to fund.
- Prepayment fees may apply to early repayments.
- Must be an existing Bank of America customer to apply online.
- Charges an origination fee.
Bank of America Business Advantage Unsecured Term Loan
Best for Established self-employed business owners
Max loan amount
Undisclosed
Min. credit score
700
Min. annual revenue
$100,000
with Fundera by NerdWallet
Pros
- Bank loan with competitive interest rates.
- No collateral required.
- Bank of America’s Preferred Rewards program can offer interest rate discounts and other perks.
Cons
- Can be slow to fund.
- Prepayment fees may apply to early repayments.
- Must be an existing Bank of America customer to apply online.
- Charges an origination fee.
Max loan amount
$5,000,000
Min. credit score
650
Min. annual revenue
Undisclosed
with Fundera by NerdWallet
Pros
- Large borrowing maximums.
- Interest rates are capped.
- Long repayment terms available.
Cons
- Collateral is typically required.
- Longer processing times than online lenders.
SBA 7(a) loan
Best for Large loan amounts
Max loan amount
$5,000,000
Min. credit score
650
Min. annual revenue
Undisclosed
with Fundera by NerdWallet
Pros
- Large borrowing maximums.
- Interest rates are capped.
- Long repayment terms available.
Cons
- Collateral is typically required.
- Longer processing times than online lenders.
Where to get business loans for sole proprietors and self-employed individuals
In general, self-employed individuals, such as sole proprietors and independent contractors, can access the same types of business loans
Financing is available from:
Banks and credit unions
Banks and credit unions typically offer the lowest interest rates and most competitive repayment terms. These lenders can provide a variety of financing options, including both term loans and lines of credit.
To qualify, however, you’ll likely need at least two years in business and good credit (often a score of 700 or higher). Some banks may also require you to secure your loan with physical collateral
SBA lenders
SBA loans are issued by participating lenders, like banks and credit unions, and partially guaranteed by the U.S. Small Business Administration. The most popular SBA loan
Online lenders
Online lenders can be a good option for those who can’t qualify for bank or SBA loans, as well as for those who want financing quickly. These lenders offer streamlined applications with minimal documentation and may fund applications in as little as 24 hours.
Nonprofit and community lenders
Nonprofit and community lenders usually focus their lending efforts on traditionally underserved businesses, such as those owned by women minority groups veterans
Some lenders also participate in the SBA microloan program
Merchant cash advance companies
How to get a business loan if you’re self employed
Self-employed individuals are typically held to the same lending standards as more established businesses, which can make the loan application process difficult.
From a lender’s perspective, self-employed business owners are often riskier to fund compared to employer-based businesses. For sole proprietorships or partnerships, there’s no legal separation between the business owner and the business itself. As a result, the business owner’s personal assets could be at a greater risk if their business is sued or runs into financial trouble. This may hurt their ability to make loan payments on time, even if they meet the lenders’ requirements.
To put yourself in the best position to get a self-employed business loan, keep these tips in mind:
Show consistent revenue
Although lenders will also consider your personal credit and time in business when evaluating your loan application, it’s particularly important to show consistent revenue as a self-employed business owner. Lenders want to feel confident that you’ll be able to repay your debt. To help illustrate your revenue, you may need to provide:
- Personal and business bank statements.
- Tax forms, with Schedule C and SE included.
- 1099 forms.
- Business financial statements, such as balance sheets, profit and loss statements and cash flow statements.
Bolster your loan application
You can improve your loan application by offering collateral, a down payment or adding a cosigner down payment
Similarly, adding a cosigner can give the lender additional security that someone will repay your debt in the case of default. Typically, you’ll want to add a cosigner that has strong credit and personal assets.
Compare multiple lenders
You should research and compare multiple lenders to determine which company can give you the best offer. You’ll want to consider factors such as maximum loan amounts, interest rates, repayment terms, funding speed and application process.
You may also want to refine your search to look for lenders that work specifically with freelancers and independent contractors. Working with one of these companies, like Giggle Finance, for example, may increase your chances of approval.
» Learn how to compare multiple offers at once using a business lending marketplace
Utilize expert resources
As a sole proprietor or self-employed business owner, it can be difficult to manage loan applications while running your business. Local business organizations can assist you through the process, often at little or no cost. Professionals at these organizations can help you prepare your financial statements and other application documents, answer questions and provide additional resources.
Alternative funding options for self-employed individuals
Here are some alternative financing options that sole proprietors and self-employed individuals might consider for their businesses:
Business credit cards
A business credit card
To apply, you’ll need information about your personal finances since you may have to personally guarantee the debt. Be prepared to provide the details about your business, too, including the legal structure, estimated monthly spending and employer identification number.
Personal loans
You can qualify for a personal loan based on your credit score and income. If you can’t repay one of these loans, however, your personal credit and assets will be at risk. Additionally, traditional business loans usually offer larger loan amounts and longer repayment terms than personal loans.
Crowdfunding
If your business has a large online or social media presence, crowdfunding
A successful crowdfunding campaign requires active maintenance, however, and online platforms may take a cut of your proceeds.
Additional resources for self-employed business owners:
Methodology
NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including:
- Transparency of rates and terms.
- Flexible payment options.
- Fast funding times.
- Accessible customer service.
- Reporting of payments to business credit bureaus.
- Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans editorial guidelines