Personal Loans For ABN Holders
The process of acquiring an ABN personal loan if you are self-employed can be a struggle. Whether an established business or starting a new one, ABN holders can always use extra help to grow their profits. This help can come in the form of acquiring different types of secured and unsecured business loans and commercial finance. An ABN is used by the majority of lenders to verify the existence of your business. It also indicates your financial stability to the lender, giving you a better chance of receiving a loan.
The acquiring of a personal loan for ABN holders is quite a different story. It can be challenging to be approved for a personal loan from some lenders if you are a business owner or self-employed. This is because lenders assume business owners or self-employed people have an unpredictable source of income, as opposed to those who have a stable job. People who have stable employment, hence steady source of income, are approved more often.
ABN personal loans for self-employed
There are different ways for self-employed to get an ABN personal loan. One of these ways is through a specialist lender. A specialist fund finance team can help you with adaptable, agile and strategic finance solutions. You can also apply for any standard personal loan for an employed person and meet the documentation requirements. For those who cannot meet the documentation requirements, you can apply for a low documentation loan. With a ‘low doc’ loan, you can borrow without submitting recent tax returns or financial statements. However, this type of loan is usually more expensive than a traditional loan.
You can find personal loans for ABN holders that have terms ranging from 6 months to 5 years or more. Depending on your lender, you might be required to guarantee your loan payments by offering up an asset or property as collateral.
Is an ABN personal loan more expensive than a regular personal loan?
Possibly but not certainly. The rates and terms you are eventually offered for an ABN personal loan will depend on the lender you apply with, their criteria, and your qualifications. These qualifications may include credit score, income and debt-to-income ratio.
For lenders, granting an ABN personal loan to business owners or self-employed individuals with an unpredictable source of income can be viewed as risky. They might offer you a loan with a higher interest rate to reduce that risk.
As you are required to submit documentation for eligibility, you might encounter difficulty proving your income or any assets you may own. However, there are options available from both traditional and non-traditional lenders offering ABN personal loans.
How do I apply for an ABN personal loan?
- Search for specialist lenders. Lenders that offer self-employed ABN personal loans most likely adapt their lending process along with the increasing number of self-employed individuals. Specialist lending is progressively sought as a solution for those who don’t fit the banks’ borrower profiles, and represents a developing market segment on various fronts.
- Keep your ABN ready. The ABN is a unique 11 digit identification number issued by the Australian Business Register (ABR) to business owners. It enables businesses in Australia to deal with different government departments and agencies. The ABN will be used by the lender as criteria when approving your loan application or not. Applying for an ABN is free and can be done online.
- Wait for a year. It may appear a little unreasonable that the self-employed need to be in business for at least a year, compared to employed individuals who only have to wait three months. But lenders have to see how your business is functioning and to guarantee that you are managing your finances well. It is also beneficial for you to recognise if you can afford the repayments.
- Keep your tax records. If you’ve been doing business for over a year, you most likely have submitted at least one tax return. Your lender will ask for this as part of the application process. This gives the lender certainty that you’ll have the capacity to reimburse your loan. Keeping your tax records is always good practice as well.
- Prepare your bank statements. Most lenders will request at least 3 months of bank statements from your personal or business account. This data will give them an overview of how you manage your finances and will guarantee they are loaning you an amount you can afford.
If you meet all these requirements, you’re likely to be approved for an ABN personal loan from any specialist lender. Keep in mind, you should only get a loan when it’s the only option and you can afford the repayments.