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Setting up your own business is one thing. But getting a loan to help you achieve this or get your business going is another.
Depending on the type of business you want to set up, you might be considering a loan. If that is the case, then it is certainly a possibility. But what if you are unemployed? Can you still qualify for a business loan?
Although it is a little more difficult for lenders to feel confident in your loans for self-employed requests, there are things that you can do to help you have a greater chance of being accepted.
Things Your Lender Wants to Know
When lenders consider your request for a loan, what mostly crosses their mind is your credit score. If they notice that your credit score is high or consistent, lenders will consider you a good candidate.
On the other hand, if your credit score is low or irregular, then you will need to be very convincing in your request and prove why you can be trusted with a loan. You can do this besides ensuring a high credit score is to have a reasonable amount of money available.
Either has the money ready or prove that you can pay regularly
If you are unemployed and don’t have that much cash saved up, then your best bet would be to prepare a detailed plan of how you will be able to meet the loan’s regular payment.
Create a logical and well-thought-out plan that will be convincing to the lender. After all, you are asking for their help, so what they want to hear is your plan to help them in return.
In this plan, you can include your initial capital and your expected income from that capital. You could also mention the process by which you will gain customers or clients. This will definitely allow your lender to see your plan in action, and that’s what’s important to lenders – seeing a viable action plan.
Alternatives to Getting a Loan
If you’re unable to secure a loan from traditional lenders, there are other alternatives you can check out.
Apply for a loan with a friend or family member
Lenders are mainly concerned with your ability to repay the loan. So if you have a friend or family member who has a good credit score, you can use them as your co-signer.
Keep in mind, though, that your lack of commitment to payments can affect their credit score, which can then affect their possibilities of getting a loan in the future. So make sure that you aren’t just using your friend or family member to get your loan.
Get a home equity line of credit (HELOC)
Whether you don’t have anyone close to you that can help or want to avoid putting them at risk, another option is to use your home as collateral for the loan based on your home’s equity.
As you’ve figured, this is also a very risky move because if you don’t meet your lender’s demands, then they will have the right to take away your home to meet what you owe.
Borrow money from a friend or family member
Finally, if you’ve done your personal best and the lender doesn’t budge, and you don’t want to risk your loved ones or your home, the last alternative might be to push your pride aside and ask a friend or family member for help.
This is also the safest option since you won’t be pressured with interests or need to pay the loan back quickly. If you borrow money from someone you trust, you can feel a lot more confident and secure. So this alternative is always a good choice if you have someone that you can borrow from.
Earn money through creative means
If all else fails, then you will have no choice but to earn your way to your goal. But this doesn’t mean that saving up for what you need will take a long time. However, it does mean that you will need to put in a little bit of extra effort.
The Bottom Line: Getting a Loan Without an Income Tax Return
Getting a loan without an income tax return is possible. If you could just meet a minimum level through your effort, you can have something to show to your lender. As a result of your success of the evident effort you put in, you may then be trusted enough to be allowed the loan you were looking for.
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