5 conditions for securing bank statement loans for the self-employed

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Independent executives use secured bank loans to efficiently obtain the necessary financing. As a self-employed borrower in need of financing, you’ve probably considered a lot of loan options. Many self-employed people have difficulty qualifying for loan programs. Factors like bad credit scores and tax filing issues prevent even savvy entrepreneurs like you from seizing potentially profitable business opportunities. If you want to get into such ventures, seek help from bank loans. Read on to learn more about the requirements for securing bank statement loans for the self-employed.

2 years of self-employment

To obtain bank statement loans, self-employed workers must be self-employed for at least 2 years. While some lenders care more about this factor than others, it is necessary to qualify. Even more, you must prove that you have been self-employed for at least 2 years. To do this, provide legal documentation indicating that you are operating your own business. Most lenders will accept a business license as proof. However, others require documents indicating that you are still in business now. After all, many entrepreneurs fail to run their businesses beyond the start-up phase. Ask your lender what their specific self-employed documentation requirements are to get a loan.

Bank statements

As the name suggests, self-employed borrowers must also provide their bank statements in order to get a bank statement loan. Print your personal and business bank statements. Lenders require between 12 and 24 months of deposits. Some lenders allow self-employed people to use only personal bank statements. Others require business bank statements. If you prefer to use part of both, there are lenders who also allow the use of both. Gather your statements and decide which type will give you the best financial reputation. Then find a lender who will accept the statements you choose. To secure bank statement mortgages, independent professionals need professional and / or personal bank statements.

Credit score

Independent professionals must also provide lenders with their credit scores to secure bank statement loans. Unlike some other types of loans, the minimum credit score required for bank statement loans varies. Some lenders require high credit scores for reassurance. Others accept self-employed workers who have a credit score of 500. Therefore, you can receive bank statement loans even if you have had financial difficulties in the past. To increase your chances of being accepted with a low credit score, explain why your score is low to lenders. If you’ve been having a bad time in your business, provide them with proof. Show them how you got away with it. By doing so, you will increase your value as a borrower. As a result, you will receive a bank statement loan to move your business forward.

Deposit

Another requirement to secure bank statement loans is a down payment. Many borrowers dread this characteristic of applying for a home loan or any other loan. However, bank statement loans usually require a small down payment. Some lenders require down payments as low as 10%. On the other hand, there are lenders who require borrowers to put 20% down payment. Lenders typically ask independent borrowers with low credit scores for higher down payments. If you have a bad credit score, save your finances before applying for a bank statement loan. Cut down on restaurant meals and cook meals at home to save money. Set a grocery budget and avoid buying unnecessary supplies. Then you can put down a deposit to get a bank statement loan.

Asset documentation

Finally, self-employed workers need asset documentation to qualify for bank statement loans. The reason is the down payment requirement. Lenders don’t want to wipe out your bank account. After all, if you have nothing left, you are less likely to give them back their money. In addition, using all of your finances puts your personal and professional financial situation at risk. So, lenders want proof that you are using funds from a quality source to deposit the money. Show your lender how you plan to pay. Once you have provided proof, you can get a loan.

Bank statement loans are a great financial aid for self-employed borrowers. To benefit from it, you must be independent for at least 2 years and have proof of it. Lenders require personal and / or business bank statements with 12 to 24 months of deposits. Credit score requirements vary by lender, so look for one that accepts your score. Likewise, down payments vary, 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 for self-employed bank statement loans.


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