Bankable when you work for yourself
How do I look lendable as a self-employed person?
3 minute read
Self-employed borrowers get judged on the same four criteria everyone else does.
Credit.
Income.
Cash and reserves.
Stability.
But how you prove each one, and the options available, are different when you work for yourself.
If you are still mixing personal and business income and expenses, that is the first thing to change.
Keep business money in one account and personal money in another.
That makes your deposits clean and your records simple.
Most lenders use your average taxable income from the last two years.
If your taxable income is enough to qualify, use it.
This is usually the least expensive path.
Lenders for both mortgages and business loans usually want 2 to 3 years of business and personal tax returns.
Write-offs lower that number.
So a healthy business can look like a low-income borrower on paper.
If taxable income will not qualify you, then a bank-statement loan may be an option.
The lender looks at 12 or 24 months of deposits instead of tax returns.
If your bank statements show much stronger cash flow than your tax return bottom line, this can help.
These loans often cost more than conventional loans.
The rules also vary by lender.
So check the actual terms before you plan around them.
Why this matters
Most self-employed denials are about organization and documentation, not the business itself.
What to do with this
- Open separate business and personal accounts if you have not already.
- Track 12 to 24 months of deposits yourself — that is the number a bank-statement lender will start from.
Want this applied to your own numbers?
Ask CredABLE about this