Personal Loans for Self-Employed Canadians: What to Know
Being your own boss comes with plenty of benefits, like flexibility and freedom. But self-employed Canadians often find it a bit harder to get approved for personal loans. Lenders prefer to see a steady income, and if you're running your own business, your income might go up and down from month to month. Don’t worry — many others are in the same boat, and there are ways to work with it. If you’re thinking about applying for a personal loan, here’s what you need to know. To learn more, keep reading.First off, be prepared to show a bit more paperwork than someone with a regular job might. Lenders will likely ask for at least two years of tax returns, recent bank statements, and sometimes even a list of your business expenses. This helps them understand how much you really earn and whether you’re able to make monthly payments.
Your credit score also plays a big part. Lenders look at it to get a sense of how you handle debt. A higher score means more options and better interest rates. If your score is lower, consider paying down some debt before applying or making a few months of on-time payments to boost it.
Also, think about how much you really need to borrow and whether you can afford the monthly payment. It’s easy to focus on the big loan amount, but the real challenge is paying it back comfortably without adding stress to your business or personal life.
Some people also look at getting a co-signer with a more steady income to help with approval. That’s an option, but make sure the co-signer understands their responsibilities — they’ll be on the hook if you can’t pay.
Lastly, don’t rush. Take time to compare lenders, interest rates, and terms. Some banks might not be as helpful to self-employed borrowers, but credit unions or online lenders may be more flexible.
Getting a personal loan while self-employed isn’t impossible — it just takes a bit more planning and patience. Take things step by step, and don’t be afraid to ask questions before signing anything. It could make a big difference in finding a loan that helps rather than hurts your financial health.