Freelancing is one of the most popular business types on the Internet today. Many people are happy when being freelancers in their daily life. You can work at your own pace when doing any freelancing jobs at home.
When you can promote yourself and grow your business, you can find some employers who are ready to give you a bigger income. However, you may have difficulties when applying for a loan as a freelancer. Many banks and financial institutions may close their doors when you need to borrow money.
They may have some of their reasons, for example, freelancers don’t have a stable monthly
income, lack of employment record, absence of the income tax return, lack of financial
documents, etc. Because of these factors, a lot of freelancers are unable to get a loan when
they need to find a good one for themselves.
However, it should never stop you from becoming a professional freelancer. We are here to help you get your loan application approved easily. In this article, we will show you some tips on how you can apply for a loan and also get your loan approved.
a. Become a registered taxpayer
This is the first requirement that you need to have when you apply for getting a loan. You can apply for a loan when you are a registered taxpayer. Therefore, you have to register with the BIR before you can start filing the ITR. This ITR will reflect how much money you can earn in a year. This document will also show the total amount of income tax that will be paid. This document is required by many financial institutions or banks who want to give you a loan.
b. Register your business
If you are a freelancer, you may have a business. It is recommended for you register your
business. You can register your business with the Department of Trade and Industry Secure your business permit from your city. This local permit is required by some banks when they want to approve your loan. Registering your business will increase your chance of having your loan approved. If you want to get your loan approved quickly, you should consider doing this step as a freelancer.
c. Get ready with your financial documents
This is another important step that you have to do. Aside from paying the income tax and also registering your business with the DTI, you also need to prepare all of your financial documents.
The banks need to look at your capacity of paying the loan. There is no better way for showing your capacity than to show your financial documents. Some documents that you can submit include proof of assets under your name, for example, vehicle or real estate, certificate of investments, bank statements, certificate of earnings, certificate of employment, etc.
d. Select the right lender for your needs
When you look around you, you can find a lot of lenders who are available today. Both private lenders and also banks are ready to accept loan applications from you as a freelancer. Bank will be a better resource for you who want to get a loan immediately. If you want to choose a private lender, you should ensure that you are dealing with a legitimate institution. Check the legitimacy of the lenders before you start giving out your information.
e. Be honest and also realistic in your loan application
You should understand that there are a lot of reasons why your loan application can be
rejected. One of these reasons can look dishonest on the loan application. When you apply for a loan, you should be truthful with the information that you share. Most lenders will have a good way to find out whether you are lying or not. It is the best option for you to stay honest when writing your loan application. Only borrow the money that you can pay and you should never go beyond that.
f. Maintain a good credit score
When you are planning to apply for a loan, you should look into your credit score. Any missed credit card payments or non-payment of previous loans will be considered as red flags. When your credit score is not good enough, you will have a lower chance of getting your loan approved.
Sean Martin D. Plantado, a finance specialist at Digido.ph notes that last year's pandemic has forced businesses to make working from home the new norm of employment. Both employee and employer believe that remote work is a work solution that isn't going anywhere. And that means many companies have started working with freelancers remotely.