The period of ten years between 2009 and 2019 saw a decline in the percentage of non-salaried individuals in India’s urban areas. For instance, the percentage of self-employed males dropped from 41.1% in 2009-10 to 39.2% in 2018. Similarly, the percentage of non-salaried females fell from 41.1% in 2009-10 to 34.7% in 2018. One of the main reasons that can be attributed to this decline is a lack of external financial assistance.
However, with financial institutions reducing their interest rates in 2019, individuals can now avail funding for their business. Even availing a personal loan for self-employed individuals has become much easier than before. They can utilise the advance to invest to expand and upgrade their business. It can help eliminate one of the major challenges that every small business owners face.
Tips for self-employed individuals to avail a personal loan easily
Personal loans are collateral-free advances which non-salaried individuals can use to fund their short term personal and business requirements. These are trickier to avail than secured loans since you do not have to pledge any asset to secure the advance. Thus, if you want to avail this advance or a business loan, you should bear some tips in mind to ensure that your loan application gets sanctioned easily.
Keep your financial records ready
To avail a personal loan for self-employed individuals, you need to submit specific documents. For instance, filing documents of business income tax returns for the past one year, audit documents of your previous year’s turnover, etc. are important documents that you need to submit for availing the loan.
Try to maintain a good credit score
Since it is an unsecured advance, financial institutions might emphasise your credit score to determine your eligibility to avail the loan. Thus, you should try to maintain an ideal credit score when applying for loans. A credit score of 750 or more is essential to ensure that you can avail the advance without any hassle.
Have a comprehensive idea about your requirements
While you apply for the advance if you have an idea about your specific requirements, the process of availing the loan becomes much easier. For instance, if you want to avail the loan to upgrade the machinery of your business, get an estimate of the cost of the same. This can help you calculate the quantum of advance you need and also present your lender with a comprehensive business plan. You can also easily get a business loan without collateral to fund your firm more easily.
Clear all your existing debts
If you have any existing debts, make sure you repay them before you apply for a new advance. If you have no liabilities, it shows lenders that you earn enough to repay the loans you avail. It also shows that you are financially responsible to handle your debts effectively.
Seek the help of a guarantor
If your credit score is not sufficient to get you a personal loan for self-employed, you can seek the help of a guarantor to increase your chances of availing the loan. Also, ensure that the guarantor has a strong financial portfolio to back up your application.
Look for lenders without stringent eligibility criteria
There are financial institutions that provide advances without imposing too many stringent eligibility criteria. However, you should not compromise with the benefits you can avail with the advance. For instance, Bajaj Finserv is one such institution that does not require self-employed individuals to comply with too many stringent eligibility criteria to avail a personal loan. You can also easily avail an unsecured business loan from them. There are many reasons why these business loans are financially beneficial for you.
Therefore, availing personal loan for self-employed individuals can become much easier if you follow the tips above. However, it is crucial to comply with all the terms and conditions to increase your chances of approval.
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