Learn about various loans for gig workers
There are plenty of reasons you may need a loan. It could be something small, like a personal loan to cover an unexpected expense. A loan could also be for something major, like buying or renovating a house, buying a car, or paying for college. For gig workers, though, getting a loan can be a bit complicated.
Maybe you’re ready to make the move from home into an office space, you need a car upgrade, or you need a new computer for work. Whatever you need your loan for, here’s what you need to know about loans for gig workers.
Yes, gig workers can absolutely get a loan! But personal loans for gig workers can require a bit more paperwork. Since gig workers’ income often comes from a variety of sources, the loan qualification process isn’t always quite as simple.
Most people work in a job where they receive a regular, steady paycheck, followed by a W-2 in January showing their income for the year. This makes it easy for them to prove their income to a bank or lender. But there’s a difference between W-2 employees and 1099 contract workers.
The bank or loan issuer generally requires proof of income to make personal loans. If you do gig work on multiple apps, you can prove your income by using your bank statement and even statements from each platform showing how much you’ve earned. Your application for a personal loan is even stronger once you’ve built up an income history and can show that your gig work provides you with a reliable income.
As a gig worker who receives 1099s, you may be able to qualify for a cash advance from a small dollar lender online. However, these advances often come with high interest rates and hefty late penalties.
In general, high-interest, high-fee loans should be avoided. If you’re short on cash, consider working on your budget or pick up an extra side hustle.
The U.S. Small Business Administration (SBA) doesn’t generally lend money, but it can connect small businesses with lenders who will lend funds. If you meet the SBA size, work type, and income requirements, you may be able to qualify for an SBA-backed loan. Check your eligibility on SBA’s website to see if you qualify.
The Paycheck Protection Program offered by the federal government ended on May 31, 2021. However, gig workers, including freelancers, Uber drivers, and other types of independent contractors, were eligible for loans prior to the program ending.
Though you may have missed out on the window to apply for a PPP loan, it’s not all bad news. It’s worth noting that the government recognized the validity and significance of gig work by offering this program to gig workers and self-employed individuals. As gig work continues to become more popular, it’s good to know that the government sees the importance of supporting gig workers.
While gig workers may need to provide more proof of income than typical employees, gig workers can still qualify for most types of loans. Mortgages, vehicle loans, and personal loans for gig workers are well within reach as long as you can meet your lender’s other requirements.
Gig work can be as challenging as it is fulfilling, especially when it comes to managing finances. But indi can help! Our tools can help you save for taxes, maximize deductions, and help you manage your finances as well as you manage your business. Apply for an account with no credit check to find out how we can make your work better work for you.