Getting a personal loan if you’re self-employed

People who are self-employed can have greater difficulty applying for a personal loan.

Running your own business can have many perks, mainly that you can be your own boss and may be able to work your own hours. But it does have its challenges too. One is that it can be difficult to be approved for a personal loan from some lenders.

This is because lenders operate on a risk-return model. People who have stable employment are approved more often because they usually have a steady stream of income. Self-employed people’s finances, on the other hand, can be much more unpredictable. According to the Australian Bureau of Statistics, 60% of small businesses fail within the first three years of operation. Naturally, with these kinds of figures, lenders can be hesitant to lend money to self-employed people due to concerns about their financial stability.

However, ABS stats from 2015 also found 11.2% of the population now works for themselves, and this number has likely risen since then. The lending process will likely adapt along with these rising numbers, but in the meantime, self-employed people might have to jump through a few more hoops in order to qualify for a personal loan.

Self-employed personal loans

Although the application process is a bit different (we’ll cover this shortly), you’ll find most lenders offer self-employed personal loans. In fact, if you exclude car loans, there are a total of 224 personal loan products rated by Canstar at the time of writing that offer them to the self-employed, which is a majority of the loans on our database. These loans are both secured and unsecured.

Secured personal loan: a loan that is secured against something that you own, such as your car or house. 


Unsecured personal loan: the lender agrees to lend you money without taking a form of security, subject to your capacity to repay.

The tables below show the top 5 personal loan products, both secured and unsecured, rated by Canstar (sorted by Star Rating from highest to lowest). Note these results only include those with links to provider’s websites. To see the complete list, use our comparison tables:

Secured personal loans for self-employed people

The table below displays some of the highest-rated secured personal loans from Canstar’s latest Personal Loans Star Ratings report that self-employed people may be eligible for. Please note this is a selection of products available for a 3-year loan of $20,000 in New South Wales with links to providers websites.

Unsecured personal loans for self-employed people

The table below displays some of the highest-rated unsecured personal loans from Canstar’s latest Personal Loans Star Ratings report that self-employed people may be eligible for. Please note this is a selection of products available for a 3-year loan of $20,000 in New South Wales with links to providers websites.

How to apply for a self-employed personal loan

There are different types of personal loans for self-employed Australians, including:

  1. Standard personal loans (secured or unsecured)
  2. Low doc loans
  3. P2P loans
  4. Specialist loans

Standard personal loans might offer better rates and features, but are usually harder to qualify for. To get a loan from a standard lender, you need to meet particular requirements, so it’s a good idea to have the following documentation on hand:

  • The last two years of your full personal and/or tax returns
  • Any recent financial statements that indicate the profit/losses your business has accrued
  • Recent bank statements showing business transactions as well as outstanding loans or credit card debts
  • Proof of rental income from any rental properties you have
  • Personal ID, which can be either your Australian driver’s license, passport or a proof of age card
  • A Notice of Assessment given to you by the ATO (Australian Taxation Office). You may need one for the past two years depending on the lender, so best be prepared
  • Company information like the ABN, address and licenses may also come in handy

If you can’t meet these requirements, you can try other loan options. Low doc loans are personal loans that require less documentation, but interest rates are typically higher than standard loans.

What to look for in a personal loan

Self-employment by nature can be more unpredictable than being employed, so it is a good idea to look for a lender that offers flexibility regarding repayment periods, drawdowns and recognising alternative sources of income. Flexibility and transparency are very important when looking for the right lender, and you should also look for one that offers both fixed and variable interest rates to give you more options.

In addition to these, Canstar has previously identified four other things to look for in a personal loan:

  1. Low interest rates
  2. Fees (or lack of)
  3. A short loan term
  4. Good customer service

The table below displays the minimum, maximum and average personal loan interest rates on Canstar’s database as at 3 November 2017.

Secured Personal Loan
Minimum 4.24%
Average 9.39%
Maximum 20.87%
Unsecured Personal Loan
Minimum 6.28%
Average 12.73%
Maximum 22.99%

Source: Canstar. Rates correct as at 3/11/2017

According to Canstar’s latest Personal Loans Star Ratings report, application fees can range from $0 to $380 for a secured personal loan and $0 to $750 for an unsecured personal loan.

Interest rates, fees and features are just some of the things Canstar takes into account when rating personal loans. See which personal loans Canstar rated 5-Stars in it’s latest report:

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