Where to get business loans for sole proprietors and self-employed individuals
In general, self-employed individuals can access the same types of small-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 business 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.
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. 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. You’ll want to consider all other options before turning to an MCA. Additional resources for self-employed business owners:
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 with 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:
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Personal and business bank statements.
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Tax forms, with Schedule C and SE included.
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1099 forms.
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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.
Alternative funding options for self-employed individuals
Here are some alternative financing options that sole proprietors and self-employed individuals may 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.
Personal loans
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Haven’t been in business long enough to qualify for a business loan.
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Want to avoid online lenders’ high interest rates.
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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 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.
Last updated on January 6, 2026
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