In the meantime, it is no longer so difficult to get a loan as a self-employed person, but you should still note some special features and take them into account.
If you have a secure job and a permanent contract in your pocket as an employee, you rarely have problems applying for and receiving a loan from a bank. Of course, the loan amount and the repayment rate also play a role here, but in general it is less of a problem for employees in an employment relationship. Things are different for self-employed and freelancers, who often have problems getting a loan from a bank. The bank overestimates the risk that people who are not employed will not be able to repay the loan.
The higher risk for banks
The reasoning of the banks is often as follows that the self-employed and freelancers cannot guarantee regular income and therefore fall into a division at the bank whose income situation cannot be correctly assessed. Employees receive their fixed income on a monthly basis, which is specified in the employment contract – this is not the case for the self-employed. However, it is important to put this assumption into perspective, which the banks have now recognized. Last but not least, mass layoffs and the bankruptcy of large companies made it all too clear that an employment relationship is not necessarily safer than a freelance job. On the contrary: freelancers find it easier to find a new job. The banks have also noticed this and are now offering special loans for the self-employed and also loans for freelancers.
Characteristics of the loan for self-employed
Such loans are seen more and more often, but the borrower should keep an eye on a particularity of his loan for the self-employed. In particular, as far as the collateral against the bank is concerned, it is somewhat higher than is normal. One of these peculiarities concerns the interest rate: For example, the loan for the self-employed often turns out to be slightly higher, because the bank still estimates the risk somewhat higher than with conventional loans.
In addition to interest, other collateral can also be requested from the bank for the loan to be approved for the self-employed. One such security could be a surety or the use of securities as collateral so that lending can take place. Another condition that banks can impose concerns the business itself. It is not uncommon for the loan to be granted only after the business of the self-employed has existed for three years.
All of these conditions of the banks are intended to reduce the risk of default on the loan. As a self-employed person or freelancer, it is of course not easy to keep the business going or to get it going at all. In this respect there is of course a higher risk among these groups of people. The bank’s assumption is that anyone who has been able to assert themselves on the market for three years as a self-employed person can continue to do so and, as a result, receives regular income from the activities in order to be able to pay the repayment rates of the loan.