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Everything You Need To Know About Self-Employed Loans

Self-employment Overview

Setting Up As Self Employed

Self Employed Loans UK

Self Employed Finance

Self Employed Loans FAQs

Frequently Asked Questions


Setting Up As Self Employed

Self-employment has witnessed rapid growth over the past few years, with the rise of the sector evident across all regions in the UK. Research from the Office for National Statistics has revealed that the number of self employed people has grown from 3.3 million in 2001 to 4.8 million in 2017 – and this figure continues to grow! There are so many reasons to become your own boss and go self employed, why wait?


Being self-employed means that you work for yourself, rather than an employer. Working for yourself, you can fall under three categories:

  • Setting up as a sole trader
  • Becoming a partner in a business partnership
  • Setting up your own limited company

All three routes provide several advantages in business. Self-employed people tend to have far more flexibility in regard to when, where and how they work, which means it’s easier to balance personal commitments such as childcare. Not only this, but you can also take greater control of work whilst exploring your entrepreneurial side.

Depending on how you work, there’s no need to report back to anyone, and earning potential is often far higher. What’s more, when calculating tax liabilities, you may be able to deduct certain costs with HMRC.


Self-Employed Sole Trader

If your plan is to go self employed as a sole trader, you will need to register with HMRC beforehand. There are lots of factors to take into consideration when doing this, which we cover in our sole trader informative guide.


Self-Employed Limited Company Owner

The business structure for limited companies differs to that of sole traders. Again, you need to register your business with Companies House to receive a ‘certificate of incorporation’ confirming that your company legally exists. After signing up you will be automatically registered to pay corporation tax.


Self-Employed Business Partner

Partnerships exist if two or more people want to go into business together but aren’t looking to set up a limited company. In many ways, a business partnership operates similarly to a sole trader business. You will be required to submit annual self-assessment forms to HMRC, but are free from a lot of the accounting responsibilities that limited companies are required to provide. As a partnership, all partners are responsible for any business losses and paying tax on their share of the profits. When setting up a self-employed business partnership, you will also need to register with HMRC.


How Much Tax Do You Pay If You Are Self-Employed?

The amount of tax you’ll pay when you become self employed will depend on:

  1. How much money you make
  2. The allowable expenses incurred whilst trading

Business-related expenses can often be deducted from your self-employed income when calculating your taxable profit. These tax bands are the same for employed and self-employed people.

Allowable expenses include business insurance, office costs, commuting costs, utility bills and stock, but make sure you thoroughly read through to ensure you get the expenses right.


Loans for Self-Employed Individuals

A self-employed business loan provides finance for people running their own businesses, operating as sole traders, limited company owners or partners of a business partnership. By working for yourself, you can decide what business purposes to use the loaned funds for. Self-employed people don’t always find it easy to obtain finance, they can often be perceived as ‘higher risk’ in the eyes of lenders.

At SME Loans, we help all self-employed people secure the finance they need to continue to succeed….


Obtaining A Self-Employed Business Loan

As a self-employed business owner, we can help you access unsecured business loans. We’re proud to offer unsecured finance from £1,000 to £500,000. Being self-employed, you might not have business assets that you can give up, which is why our unsecured self-employed loans are the perfect solution.

With our self-employed loans, there’s no need to offer business or personal collateral to secure the loan against – instead it’s likely you’ll be asked to provide a personal guarantee. A personal guarantee is a legally binding agreement stating that if your self employed business, limited company or business partnership defaults on loan repayments, you as the business owner become personally liable for paying back the money in full.

Our flexible repayment periods mean you can pay back your self-employed business loan over a period of 1 to 5 years, and as we offer competitive rates, interest will always be as low.

The Merchant Cash Advance

Our merchant cash advance product can also benefit self employed business owners, providing their business takes sales through a card terminal. With a merchant cash advance, you can receive an advance on the revenue your self employed business is predicted to make through future debit and credit card sales.

We offer these loans for self-employed individuals, from £5,000 and £500,000 which gets repaid using a small percentage of future customer transactions. With this product the lender will work with your card terminal processor to set up automatic withdrawals of the pre-agreed percentage of sales.


Loans For Self-Employed Workers With Bad Credit

Business owners with a bad credit rating are often discouraged from seeking finance from lenders. At SME Loans we’re working hard to change this – there’s no need for your business dreams to be put on hold because of past financial faux pas. If you have a poor credit score we will look largely at your business performance and you could still be eligible for a self-employed business loan. For more information on accessing finance with bad credit, please read our helpful guide.


How to apply for a self-employed business loan

We’ve helped numerous self-employed individuals, from a variety of sectors, obtain finance. You’re eligible to apply for one of our self-employed loans if:

  • You are registered in the UK with HMRC
  • You have been actively trading for 6 months minimum
  • Your monthly turnover or card sales equate to £5,000 minimum
  • You, as a self-employed business owner, are over the age of 18

If you have any questions regarding our application form, qualifying criteria or anything else, please do give us a call on 01244 506279 – we’re always more than happy to help.

Step 1:

Once you click to apply you will be redirected to a new page where we will ask for more information about your business, including:

  • The business name
  • The number of months or years trading
  • Monthly turnover
  • The amount you want to borrow

Step 2:

Once you’ve told us a bit more about your business, please expect to disclose your personal details including your full name, position in the business and contact details.

Step 3:

It’s really important that you read through the terms and conditions before clicking to accept and receive your quote. After you’ve read through the terms, your application will be reviewed without delay by one of our approved business finance suppliers. Their job is to find the best lender for your self-employed business.

Step 4:

Please expect a call from one of our trusted account managers to discuss the terms of your self-employed business loan or cash advance agreement.

Step 5:

Take time to carefully read through the terms of agreement, asking any questions you are unsure of before signing the relevant documentation and returning it to the lender. After that, the money will be deposited in your account in as little as 24 hours.


Frequently Asked Questions

If you still have questions about self-employed loans, make sure to check out our FAQs below for some more answers.

A self-employed loan is a form of financing specifically designed for self-employed business owners or freelancers. Self-employed loans are generally unsecured (against an asset), but can be secured against property via a charge in some circumstances. They can also come in the form of a merchant cash advance or a personal loan.

You can apply for one of our self-employed loans by completing an online application. As a business owner, you will be required to provide some basic information about the business, such as your monthly turnover. You will also be required to input some personal details and contact information. If your application is successful, an account manager will then be in touch to discuss the terms of your loan deal and to answer any questions you may have.

In two words, experience and connections. Our dedicated team of brokers have years of experience which allows them to recommend the most appropriate product for any requirement. Our industry connections mean we have access to the most comprehensive panel of lenders. This allows us to obtain the most competitive terms in the market.

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