Guide to taking Personal Loan for Self-Employed without Income Proof
A personal loan is one of the most accessible financing options available in case of an emergency. Easy documentation and minimum processing time characterize the ease of drawing a personal loan.

You can take personal loans for the following purposes:
- To invest in a business
- To fulfill travel expenses
- For weddings and other domestic functions
- To fund higher education
- To pay any unexpected medical bill
For personal loans, you do not have to provide any collateral. You also have the advantage of a flexible repayment tenure that can go up to 5 years depending upon the bank that you choose.
It is usually perceived that getting a personal loan for self-employed or business owners is much harder than a salaried individual. For, it is difficult to provide a stable income proof like a salary slip for small businesses.
However, this is a myth. You can successfully avail of Personal Loan for Self-Employed without having traditional Income Proof. Here is a quick guide:
What is the Eligibility Criteria for Self-Employed Individuals?
The eligibility criteria for a personal loan for self-employed may vary from one bank to another. However, whether you are choosing an SBI Personal Loan or a loan from any other financing institution, there are some general criteria that you need to fulfill in order to avail of a loan. These are:
- The borrower should be a resident of India.
- The minimum age of the applicant is usually between 21 years and 24 years, depending upon the financing institution.
- The maximum age at the time of maturity of the loan is usually 65 years.
- The minimum work experience required in the respective fields is 2 to 3 years.
- The profit or the annual turnover of the applicant should be as per the guidelines of the lender.
How is the Rate of Interest Affected?
Since personal loans do not require any collateral, the rate of interest is usually higher than other types of loans. For self-employed individuals, the rate of interest is higher than salaried individuals because the risk is higher without a guaranteed fixed income each month.
The rate of interest differs from one bank to another. This interest rate is charged as per the profile of the applicant and the scheme that he or she has chosen for. However, the rate of interest is negotiable, and even self-employed individuals can get a better rate of interest with major lenders such as SBI Personal Loan, subject to fulfilling the following requirements:
- The applicant can get a lower interest rate if he or she has a good credit score.
- A good credit history without any red flag also helps in acquiring better ROI.
- The relationship that the individual shares with the banking institution can also influence the Rate of Interest.
- If the applicant can show various sources of income, such as rent from a property, the ROI can be negotiated.
How to Apply For a Personal Loan For Self-Employed Individuals?
There are two options available for Self-Employed Individuals to Apply for a Personal Loan:
- Online: You can fill up an application form available on the website of the bank that you choose to take the loan from. Once the application has been submitted online, a representative of the bank will get in touch with you for documentation and other details pertaining to the loan. It is also possible to use your net banking account to apply for a loan with certain banks.
- Apply at the nearest branch: You can also submit the application form along with the necessary documents at the nearest branch of the bank that you have chosen.
- Through the Phone: Contact the customer care executives of the bank that you choose to take the loan from to initiate the application process.
What are the Documents Required?
In order to avail of a personal loan, the most important step is documentation. Although the requirement is minimal, you need to make sure that the documents provided are authentic and as per the guidelines provided by the bank. The common documents with most banking institutions are:
- A duly filled and signed application form
- Passport sized photograph
- Photo ID including Passport, PAN Card, Voters ID, or any other Government issued ID Card.
- Age Proof
- Proof of Residence including rental agreement and utility bills
- Latest IT returns along with a computation of income
- Profit and Loss Statement of the business over the last 2 years
- Signature verification proof
- Last 3 months’ bank statements or 6 months bank passbook copies.
Loans for Self-Employed Individuals with Bad Credit Score
Even with a poor credit score, it is possible for self-employed individuals to get a personal loan. The best option available to get quick funds for a financial emergency is a secured personal loan. This is a loan against any term deposit, fixed deposit, or other assets including property. Based on the valuation of the asset provided, one can avail of a personal loan with a quick turnaround time.
However, to improve the rate of interest and to get a better deal, it is a good idea to follow these steps to improve your credit score:
- Ensure that repayments towards credit card and other credit facilities are regular.
- Maintain the right mix of secured and unsecured loans.
- Repay your debts and try to close as many loan accounts as possible.
- Reduce the loan utilization ratio. This is the amount that you use from the loan amount sanctioned.
- Avoid opening new credit cards that you may not put to use.
- Do not make cash withdrawals on your credit card unless it is a financial emergency.
- Reduce the outstanding balance on your credit cards with revolving credit facilities.
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