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Best Business Loans for the Self-Employed and Sole Proprietors

By Randa Kriss, Rosalie Murphy

Last updated on September 4, 2024

Edited bySally Lauckner

✅Fact checked and reviewed

Banks, SBA- and online lenders offer business loans for sole proprietors and self-employed individuals.

See Your Loan Options

with Fundera by NerdWallet

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When you’re self-employed, a small-business loan can provide funds to help you manage or grow your operations. Getting a self-employed business loan, however, isn’t always easy. Lenders may ask sole proprietors or freelancers for additional documentation to prove that their income is reliable.

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.

The term self-employed generally means that you work for yourself as opposed to an employer. According to the IRS, self-employed individuals can fall into any of the following categories:

Sole proprietor or independent contractor.
Member of a partnership that practices a trade or runs a business.
Otherwise in business for yourself (including in a part-time business or as a gig worker).

250+ small-business products reviewed and rated by our team of experts.

95+ years of combined experience covering small business and personal finance.

50+ categories of best business loan selections.

Objective and comprehensive business loans ratings rubric. (Learn more about our star ratings.)

NerdWallet's small-business loans content, including ratings, recommendations and reviews, is overseen by a team of writers and editors who specialize in business lending. Their work has appeared in The Associated Press, The Washington Post, MarketWatch, Nasdaq, Entrepreneur, ABC News, MSN and other national and local media outlets. Each writer and editor follows NerdWallet's strict guidelines for editorial integrity to ensure accuracy and fairness in our coverage.

How much do you need?

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are 7 of the best self-employed business loans

Lender	NerdWallet Rating▼	Max loan amount▼	Min. credit score▼	Next steps
OnDeck - Line of credit See Your Loan Options with Fundera by NerdWallet	5.0/5 Best for Working capital needs	$100,000	625	See Your Loan Options with Fundera by NerdWallet

Fora Financial - Online term loan See Your Loan Options with Fundera by NerdWallet	4.5/5 Best for Bad credit	$1,500,000	570	See Your Loan Options with Fundera by NerdWallet

Giggle Finance Merchant Cash Advance See Your Loan Options with Fundera by NerdWallet	Best for Freelancers and independent contractors	$5,000	300	See Your Loan Options with Fundera by NerdWallet

Accion Opportunity Fund - Small Business Working Capital Loan Read Review	4.6/5 Best for Traditionally underserved borrowers	$250,000	570	Read Review

SBA Microloan See Your Loan Options with Fundera by NerdWallet	Best for Startups	$50,000	620	See Your Loan Options with Fundera by NerdWallet

Bank of America Business Advantage Unsecured Term Loan Read Review	4.8/5 Best for Established self-employed business owners	Undisclosed	700	Read Review

SBA 7(a) loan See Your Loan Options with Fundera by NerdWallet	Best for Large loan amounts	$5,000,000	650	See Your Loan Options with Fundera by NerdWallet

Here are 7 of the best self-employed business loans

Best for Working capital needs

OnDeck

Max Amount

$100,000

Min. Credit Score

625

See Your Loan Options

Best for Bad credit

Fora Financial

Max Amount

$1,500,000

Min. Credit Score

570

See Your Loan Options

Best for Freelancers and independent contractors

Giggle Finance

Max Amount

$5,000

Min. Credit Score

300

See Your Loan Options

Best for Traditionally underserved borrowers

Accion

Max Amount

$250,000

Min. Credit Score

570

Best for Startups

U.S. Small Business Administration

Max Amount

$50,000

Min. Credit Score

620

See Your Loan Options

Best for Established self-employed business owners

Bank of America

Max Amount

Undisclosed

Min. Credit Score

700

Best for Large loan amounts

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

650

See Your Loan Options

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How Much Do You Need?

Fundera by NerdWallet

4.5 Excellent

4.5 Excellent

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 as larger companies — provided they have proof of steady income.

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.

Business term loans are often used for one-time investments in your operations, whereas business lines of credit are better-suited for ongoing cash flow needs. Some banks may also offer industry-specific funding, such as medical practice loans.

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, such as equipment or real estate.

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, the 7(a) loan, offers funding up to $5 million and repayment terms up to 25 years.

SBA 7(a) loans can be a good option for purchasing equipment, making renovations, expanding to a new location and buying inventory or supplies, among other uses. Although these loans may be slightly easier to qualify for than bank loans, you’ll still need good credit and finances to get funding.

» MORE: Compare SBA loans for the self-employed

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.

Online lenders typically have lenient qualification requirements and may be able to work with startups or borrowers with bad credit. As a result of their speed and flexibility, however, online lenders often charge higher interest rates and offer shorter repayment terms.

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 or veterans. These lenders have flexible qualification requirements, but still offer competitive interest rates and repayment terms.

Some lenders also participate in the SBA microloan program, which offers loan amounts up to $50,000. Nonprofit and community lenders can be a particularly good option for self-employed individuals who are looking for business training — in addition to funding. Many of these organizations provide business training and coaching, among other resources.

Merchant cash advance companies

Merchant cash advance companies provide you with an upfront sum of capital that you repay using a percentage of your debit and credit card sales, plus fees — otherwise known as a merchant cash advance, or MCA. MCAs are usually fast to fund and easy to qualify for, but can be expensive, with APRs reaching triple digits.

Merchant cash advances are typically used by businesses that bring in significant credit and debit card sales. Generally, however, you’ll want to consider all other options before turning to an MCA.

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. Offering collateral or a down payment, especially when it’s not required, can help make your application more attractive to lenders.

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.

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.

» MORE: How to get and apply for a business loan

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 is a simple way to quickly unlock a small amount of financing and can help you establish a business credit history to qualify for larger loans in the future. Credit limits, interest rates and annual fees on business credit cards can vary depending on each applicant's credit history. Like personal credit cards, some business credit cards offer rewards such as cash back, 0% APR introductory periods or travel points and miles.

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.

» MORE: Best business credit cards for sole proprietorships

Personal loans

Personal business loans can be a solid source of funding for self-employed individuals who haven’t been in business long enough to qualify for a business loan, want to avoid online lenders’ high interest rates or lack the collateral to secure a business loan.

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 can be a good way to get capital. With crowdfunding, you create a campaign on an online platform and interested individuals can donate to your business. Typically, you offer a reward (e.g. exclusive products, access to events) or equity in exchange for these donations.

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:

Last updated on September 4, 2024

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 and our editorial guidelines.

Wondering if you qualify?

It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.

See Your Loan Options

Meet the editorial team

Randa Kriss

Lead Writer | Small business

Randa Kriss is a lead writer and NerdWallet authority on small business. She has nearly a decade of experience in digital content. Prior to joining NerdWallet in 2020, Randa worked as a writer at Fundera, covering a wide variety of small-business topics and specializing in the lending and banking spaces. Her work has been featured in The Washington Post, The Associated Press, MarketWatch and Nasdaq, among other publications. She has also hosted a webinar as part of the SBA's 2024 National Small Business Week Virtual Summit. Randa is passionate about helping small-business owners make educated financial decisions, especially when it comes to affordable funding. She is based in Chicago.

Read more from Randa Kriss

Education: B.A. in English and Spanish from Iona University (formerly Iona College)

Awards: 2024 Xana Fellowship from the Society for Advancing Business Editing and Writing

Previous experience: Fundera, Serendipity Magazine, American Kennel Club

Rosalie Murphy

Rosalie Murphy

Lead Writer | Small business, business insurance, business banking

Rosalie Murphy is a small-business writer at NerdWallet. Since 2021, she has covered business insurance, banking, credit cards and e-commerce software, and her reporting has been featured by The Associated Press, MarketWatch, Entrepreneur and many other publications. Rosalie studied journalism at the University of Southern California and holds a graduate certificate in Quantitative Business Management from Kent State University, where she's now pursuing an MBA. She is based in Chicago.

Read more from Rosalie Murphy

Education: B.A. in Print and Digital Journalism from University of Southern California, Graduate Certificate in Quantitative Business Management from Kent State University

Awards: National Association of Real Estate Editors: Best Young Journalist, Society for Advancing Business Editing and Writing: Best in Business (Explanatory)

Sally Lauckner

Assigning Editor | Small business

Sally Lauckner is an editor on NerdWallet's small-business team. She has over 15 years of experience in print and online journalism. Before joining NerdWallet in 2020, Sally was the editorial director at Fundera, where she built and led a team focused on small-business content and specializing in business financing. Her prior experience includes two years as a senior editor at SmartAsset, where she edited a wide range of personal finance content, and five years at the AOL Huffington Post Media Group, where she held a variety of editorial roles. She is based in New York City.

Read more from Sally Lauckner

Education: B.A. in English from Columbia University, M.A. in journalism from New York University

Previous experience: Fundera, SmartAsset, HuffPost, AOL