Self-employed loan seekers are not welcome as customers at every bank because their income is subject to fluctuations and is also determined by them. As proof of income can serve self-employed balance sheets and the BWA as well as tax assessments. However, these contain no information about the regular monthly, but only data on the annual income. In some businesses, self-employed workers earn most of their income in a few months. This not only applies to the Christmas business of the toy industry and the summer or winter travel business in tourism. A loan for self-employed persons without proof of income is possible, whereby a distinction must be made between the business and the private cause of the borrowing.
Borrowing for the self-employed without proof of income for business purposes
It is not uncommon for banks to lend to self-employed persons without proof of income for business purposes. Instead, this approach is common if the money raised serves to finance a well-defined investment. In this case, the lender is less interested in the current income of the self-employed person or the current operating profit than in what future proceeds can be achieved thanks to the investment. In the start-up phase and for individual investment projects recognized as worthy of promotion, the development loan from KfW Bank is an ideal solution. Depending on the program, the development bank grants corporate loans without proof of income at reduced interest rates and additionally offers a largely variable repayment, the start of which will only take a few years. Similar support programs have been set up by regional Volksbanks and savings banks, whose statutes expressly call the promotion of the local economy a task.
Bank borrowing for self-employed persons without proof of income for private purposes
For most financial institutions, the disposition limit on the personal checking account represents a loan for self-employed persons without proof of income. To obtain this, self-employed persons do not deduct the cash to be booked as a private withdrawal from the business account but transfer it from there to their private checking account. As a rule, the bank that owns the private account considers these transfers to be full cash inflows. On the other hand, private income can not be described as proof of income or profit, since the self-employed can deduct higher or lower amounts than the actual operating profit. Credit cards are also available to the self-employed partly without proof of income, since an increasing number of issuers at reissues only the indication of the monthly income, but no evidence required. The prerequisite for this procedure is usually that the self-employed person complies with the standard availability framework. As a rule, the issuer will solicit the demand for proof of income as soon as the cardholder requests an increase in the card limit. An installment loan can also be taken out as a loan for self-employed persons without proof of income, if the applicant decides on a suitably advertised instant loan. The real reason for waiving the submission of proof of income by the self-employed loan applicant is that the promised short processing time does not permit a thorough examination of the documents normally required. The lender asks for the instant loan basically the monthly income. Self-employed people can, of course, average their monthly earnings by calculating one-twelfth of their annual earnings. However, when planning loan repayments, be aware that the rate will be the same every month and, if possible, opt for a long term, as this will lead to low monthly payments. Before filing the loan application, self-employed people look for whether the bank’s Public Procurement Directives exclude them as lending customers. An unsuccessful loan application does not only cause an avoidable expenditure of time for the self-employed, but also leads to a worsening of the private credit score. In some cases, self-employed bankers who are in principle bankers are willing to award a loan taken out jointly with a co-applicant.
Alternatives to bank loans for the self-employed without proof of income
Suppliers or mail order companies often grant installment payments as a loan for self-employed persons without proof of income for both business and private orders. For privately arranged order transactions usually does not even the demand for the employment status. For any purpose a loan for self-employed persons without proof of income can be taken up via a platform for private credit mediation. The loan request for a self-employed person contains complete information about the purpose and the income situation of the borrower. A self-employed person’s loan without proof of income is also available for business use. The prerequisite is that the loan seeker in the loan request indicates the planned operational use of funds. However, it can also be observed that the platform members registered as lenders are more likely to draw a loan for self-employed persons without proof of income for private purposes than for business use. The fact that private borrowing by self-employed banks is difficult, is considered as an argument for drawing corresponding loan requests for social reasons.