Self-employed executives use secure bank statement loans to obtain necessary funding efficiently. As a self-employed borrower who needs financing, you likely have considered numerous loan options. Many self-employed individuals have trouble qualifying for loan programs. Factors such as poor credit scores and tax return issues keep even savvy entrepreneurs like yourself from taking on potentially profitable business opportunities. If you want to set off on such business ventures, look to bank statement loans for assistance. Continue reading to learn about the requirements to secure bank statement loans for the self-employed.
2 Years Of Self Employment
In order to obtain bank statement loans, self-employed individuals must be self-employed for a minimum of 2 years. While some lenders care more about this factor than others, it is necessary to qualify. More so, you need to prove that you have been self-employed for at least 2 years. To do so, provide legal documentation stating that you operate your own business. Most lenders will accept a business license as proof. However, others demand documents that state that you are still in business currently. After all, many entrepreneurs fail to manage businesses past the startup stage. Ask your lender what their specific self-employed documentation requirements are to earn yourself a loan.
As the name suggests, self-employed borrowers also have to provide their bank statements in order to obtain a bank statement loan. Print out both your personal and business bank statements. Lenders require between 12 and 24 months of deposits. Some lenders allow self-employed individuals to use solely personal bank statements. Others require business bank statements. If you prefer to use a portion of both, there are lenders that allow the usage of both as well. Collect your statements and decide which type will yield you the best financial reputation. Then, find a lender who will accept the statements you chose. To secure bank statement mortgage loans, self-employed professionals need business and/or personal bank statements.
Self-employed professionals also need to provide lenders with their credit scores to secure bank statement loans. Unlike some other types of loans, bank statement loans’ minimum required credit score varies. Certain lenders demand high credit scores for reassurance. Others accept self-employed individuals who have credit scores of 500. Therefore, you can receive bank statement loans even if you struggled financially in the past. To increase your chances of getting accepted with a low credit score, explain why your score is low to lenders. If you underwent a bad time in your business, provide them with proof. Show them how you managed to work through it. In doing so, you will increase your value as a borrower. As a result, you will receive a bank statement loan to further your business.
Another requirement to secure bank statement loans is a down payment. Many borrowers dread this feature of applying for a home loan or any other loan. However, bank statement loans usually require a low down payment. Some lenders require down payments as low as 10%. On the other hand, there are lenders who demand borrowers to put 20% down. Lenders usually ask self-employed borrowers with low credit scores for higher down payments. If you have a poor credit score, save up your finances before applying for a bank statement loan. Cut back eating at restaurants and cook meals from home to save money. Set yourself a grocery store budget and avoid purchasing unnecessary supplies. Then, you can put down a down payment to obtain a bank statement loan.
Lastly, self-employed individuals need asset documentation to qualify for bank statement loans. The reason for this lies behind the down payment requirement. Lenders do not want to wipe out your bank account. After all, if you have nothing left, you are less likely to repay them their money. In addition, using all of your finances puts both your personal and business financial states at risk. Thus, lenders want proof that you use finances from a quality source to put money down. Show your lender how you plan to pay. Once you provide proof, you can secure a loan.
Bank statement loans pose beneficial financial assistance to self-employed borrowers. To qualify for one, you need to be self-employed for a minimum of 2 years and have proof of it. Lenders require personal and/or business bank statements with 12-24 months of deposits. Credit score requirements vary based on lenders, so search for one that accepts your score. Similarly, down payments range, but are required by all lenders. Finally, show your lender an overview of your assets and explain where your down payment money is coming from. Follow these requirements to secure bank statement loans as a self-employed individual.
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