Freelancers have a not very advantageous position with banks when it comes to granting credit. They lack something that banks attach great, if not the greatest value to, namely regular income. The income of freelancers often fluctuate greatly, and with them the chances of getting a cheap loan for freelancers from the bank. However, if this is not within reach or has already received a rejection, then this is no reason for resignation, because the market holds numerous alternatives ready. Read more at http://oryxoman.com
A Loan for Freelancers – Opportunities and Alternatives
The first point of contact when it comes to a loan for freelancers is usually the house bank. Here one is already known and based on this a more or less strong basis of trust has been established. This can be very useful for loans, but especially if it is not ordered to their own credit rating, as banks usually want it.
This does not even mean that the profitability of the freelancer is bad, on the contrary. Good income can also be earned over longer periods of time. However, this is far from equating salary with an employer.
A regular salary or salary, which is proven in the form of a corresponding payroll, confirms the credit institution not only the past and current income, but also to a considerable degree the future, which makes the income from dependent work to an even more important security leaves.
Although freelancers can prove past income by income tax assessment, future income can not be accurately predicted in the short or long term. Last but not least, banks assume that the self-employed and freelancers are the first to be affected by macroeconomic fluctuations, which makes their creditworthiness equally unstable and leaves the loan for freelancers a long way off.
The solution for freelancers: The personal loan
If banks and credit institutions are not an alternative to raising capital for the reasons mentioned above, there is another solution: private credit. Instead of a bank, the borrower faces private investors, who finance their project in whole or in part, if the conditions are attractive enough. A personal loan greatly improves the chances of obtaining a loan for freelancers, as the conditions are less stringent. However, this does not mean that no collateral is necessary.
A personal loan is requested on one of the switching platforms found on the internet. Before a registration, however, a careful comparison is required. An important feature is the fees. Credit intermediaries who charge fees only after successfully arranging a personal loan and not at the time of registration are definitely preferable. The maximum amount of credit also varies from provider to provider, but can be estimated on average at about 50,000 USD. The term can usually be chosen freely, but should remain reasonable in terms of investors’ needs.
Even a personal loan requires a detailed description of the financial situation. Income and expenditure must be compared to each other in order to determine the applicant’s creditworthiness. The interest rate is then made dependent on the credit rating or provided with a corresponding risk premium. Investors then decide on the basis of the expected return for or against financing the respective project.
But not only the interest rate is a crucial factor in such a loan for freelancers, also the purpose can affect the attractiveness of a project. Business plan and business idea come into play here again. If both of them conclude that the borrower has given sufficient thought to their project and this is also communicated accordingly, then private credit in particular can become a lifeline for freelancers and the self-employed.