A guide to payday loans for self-employed people

More and more people in the UK are choosing to work for themselves. A mix of factors has fuelled this rise in entrepreneurial spirit. Self-employment offers some great benefits, but it also comes with a few setbacks. One of the biggest challenges? Accessing financial products, including mortgages and short-term loans, can be more difficult when your income isn’t fixed.

At Moneyboat, we’re proud to be a responsible lender. That means we only provide short-term loans to those who meet our eligibility criteria, which includes being in full-time or part-time employment. Unfortunately, this means we don’t lend to self-employed individuals.

That said, we understand that financial bumps can happen to anyone. So, while you may not be eligible for a Moneyboat loan, we still want to help you make confident, informed financial decisions. This guide is here to explain how payday loans for self-employed people work, what alternatives are out there, and what to consider before borrowing.

In this guide: 

• What does it mean to be self-employed?
• Why might you need a payday loan if you’re self-employed?
• Can I get a loan if I’m self-employed?
• What loans can I get if I’m self-employed?
• How do I apply for a self-employed loan?
• What documents do you need to apply for a loan if you’re self-employed?
• Alternatives to short-term loans for the self-employed
• How to avoid payday loans
• A word of caution…
• Support is out there

What does it mean to be self-employed?

If you’re self-employed, you work for yourself rather than being employed by a company or organisation. That might mean you’re:

• A sole trader
• A freelancer or contractor
• Running your own business as a limited company

Self-employed people typically invoice for their services or take a wage from their business. In some cases,  they might keep their wage to a minimum to reduce taxation costs, or they may have to wait for invoices to be settled by their clients.

While self-employment can come with great flexibility and independence, it also means your income can vary month to month. This income unpredictability can make it harder to access traditional financial products, including loans.

Why might you need a payday loan if you’re self-employed?

Like anyone else, self-employed people may also face periods of financial instability and require a payday or short-term loan to help tide them over. Sometimes it’s for personal reasons, such as financial emergencies like a boiler breaking down, vehicle repairs, or covering urgent household bills. Other times, the need is business-related, for example, replacing faulty equipment or covering expenses while waiting for a late-paying client.

In these situations, getting fast access to cash can make all the difference. But for self-employed individuals, things aren’t always straightforward. Irregular income or limited payslips can make access to cash more sporadic. And they may find it harder to prove affordability, even if they’re earning enough overall.

Can I get a loan if I’m self-employed?

In short, yes, it may be possible to get a loan if you’re self-employed – but this may depend on the lender. Some lenders may consider providing short-term or payday loans to self-employed people. Longer-term personal loans – such as those repayable over a year or more – may be easier to secure if you’re self-employed, as they typically involve more detailed affordability assessments and may be better suited to fluctuating incomes.

Lenders that do accept self-employed loan applicants tend to favour those with very good credit records, as this shows a history of managing debt responsibly.

If you’ve checked your credit rating through a credit agency, such as Experian, and you know it’s strong, you may have a better chance of getting a payday loan despite being self-employed. However, you’ll have to demonstrate that you can afford the repayments. This is because the Financial Conduct Authority (FCA) insists that lenders carry out extensive affordability checks when they provide short-term loans.

Why do some lenders avoid self-employed people?

For lenders, it all comes down to risk. They’ll need to see proof that a borrower receives an income, of a certain level, at the same time every month. If lenders can confirm minimum levels of regular income, they’re reducing the risks involved with lending.

Self-employed people, unemployed people and students don’t tend to have a regular fixed income, and therefore, lending to them can involve a higher level of risk. Some will still consider lending, but loans will usually come with very high-interest rates and strict credit checks to help minimise the risks involved.

For more on this topic, head over to our handy guide on everything you need to know about payday loan criteria.

What loans can I get if I’m self-employed?

Being self-employed doesn’t mean you’re shut out of borrowing, far from it. There are several types of loans that could work for you, depending on your situation and what you need the money for. Whether it’s to cover a personal emergency, smooth out your cash flow, or invest back into your business, here are some of the options available:

• Personal loans: Unsecured personal loans for self-employed people can be used for almost any purpose, like consolidating debts or covering emergency costs. You don’t need to secure the amount you’re borrowing against any assets. You’ll typically need to show proof of income and a good credit history.
• Business loans: These loans are designed specifically for business needs like buying stock or equipment. Lenders may ask for recent accounts, projected income, or a business plan to understand how you’ll repay the loan.
• Guarantor loans: If your income is irregular or you have a limited credit history, you may find it harder to access traditional borrowing. In this case, a guarantor loan could be an option. These loans require a third party, such as a friend or family member with good credit, to guarantee the loan. Just keep in mind that if you miss any repayments, your guarantor will be expected to cover it, which can put pressure on personal relationships. Our guide on whether you need a guarantor for a loan has more information on this topic.
• Secured loans: These allow you to borrow against an asset, like your home, as security. They can offer larger borrowing limits or lower interest rates but can come with more risk. If you fall behind on repayments, you could lose the asset you’ve secured the loan against.

Can I get a self-employed loan with bad credit?

Yes, it’s possible, but you might have fewer options to choose from, and the rates offered may not be competitive. Some lenders may also offer you less than you originally wanted to borrow. But having bad credit doesn’t mean you’re out of options, there are still lenders who specialise in loans for those who are self-employed and have bad credit.

Can I get a self-employed loan with no proof of income?

If you’re considering a self-employed loan with no proof of income, be aware these are extremely limited and often difficult to secure. Most lenders will require some form of proof of income to ensure you can afford the loan and repay it responsibly.

Can you get a payday loan if you’re unemployed or a student?

The FCA brought in tough regulations on the consumer loans market in 2014 that made affordability checks a legal requirement for all lenders. This means that if you don’t have an income to repay a loan, you shouldn’t be offered the loan in the first place.

If you’re a student or unemployed and you’re looking for a short-term loan, there may be other alternatives to consider. Check out our full guide on payday loans for the unemployed to learn more.

Quick Look: Typical payday lending minimum criteria

You will usually need:

• A regular income
• Full or part-time employment
• To be aged 18 or over
• A UK bank account
• A mobile phone
• A minimum NET pay of £1,000 per month
• To pass credit checks
• A UK address

Read our minimum lending requirements for more details.

How do I apply for a self-employed loan?

Before applying for a loan as a self-employed individual, it’s worth taking some time to get organised. While being your own boss doesn’t stop you from getting a loan, lenders do want to see that it’s affordable and suitable for your situation.

Here’s how to get started:

• Gather your financial documents: Make sure you have recent bank statements, income records, or tax returns ready to go. These will help you show lenders that you have a steady enough income to repay the loan.
• Check your eligibility: Most lenders will look at your income, credit history, and existing financial commitments. Some may run soft credit checks upfront so you can see your chances of being approved before you formally apply.
• Compare your loan options: Not all loans are created equal. Look at interest rates, repayment terms, and any fees before deciding which lender is the best fit, especially if your income isn’t regular. If you’re borrowing for personal reasons vs. business reasons, make sure the loan type matches your needs.

Once you’ve done the prep, applying is usually quick and easy – especially if done online. And when you’re ready, you can head straight to the lender’s application form with confidence.

How much can I borrow if I’m self-employed?

The amount you can borrow will depend on a few key factors. Mainly your income, credit history, and the type of loan you’re applying for. Lenders will want to see that the loan is affordable based on your earnings, even if your income isn’t the same every month.

There’s no one-size-fits-all amount, but the better you can demonstrate your ability to repay, the more likely you are to be approved for a higher loan amount.

What documents do you need to apply for a loan if you’re self-employed?

When you’re self-employed, applying for a loan means showing a little extra proof of your income, but it’s usually nothing too complicated. Lenders just need a clear picture of your finances to make sure the loan is affordable for you.

Here’s what you’ll typically need:

• Proof of income: This could include recent bank statements, invoices from clients, or HMRC tax returns (like an SA302). These help to show that you have a regular flow of income, even if it varies from month to month.
• Proof of ID: A valid passport or driving licence is typically fine. This is just to confirm who you are.
• Proof of address. Recent utility bills, council tax statements, or bank correspondence can all do the job.
• Tax returns (SA302s or HMRC summaries): These help to confirm how much you’ve earned over the last year or two and are one of the most common ways self-employed borrowers prove their income.
• Business details (if applying for a business loan): Some lenders may ask for business accounts, cash flow forecasts, or a business plan – especially if you’re borrowing to invest in your business.
• Recent bank statements: Lenders often ask for at least one to three months of business or personal bank statements to get a snapshot of your income and spending habits.

Alternatives to short-term loans for the self-employed

If a short-term loan isn’t available, or isn’t the right fit, there are alternative options to explore:

Bank account overdrafts

Your bank account provider may consider you for an overdraft even if you’re not employed or if you’re a student. An overdraft is a line of credit that you pay interest on. The interest is only charged on the balance of the debt, as opposed to the entire overdraft limit.

For a deeper dive into how overdrafts work and what they're commonly used for, head over to our guide on what overdrafts are used for.

Credit cards

Credit cards can be difficult to come by if you don’t have a regular income or a good credit record. However, some credit cards might be available for students, or people who are newly unemployed, on zero-hours contracts, or self-employed.

Borrowing from friends and family

While it’s not always easy to ask, borrowing from friends or loved ones may be a more affordable solution than high-interest credit. It’s often considered the lowest-risk option in the short term, and many people are surprised at how willing friends and family can be if it might help during a financial emergency.

Credit unions

Credit unions are publicly owned and run organisations that provide credit to members who have contributed to the union. If you think you’d like to get involved with a credit union so that you can consider their loans and other financial products, here's a site that will help you find your credit union.

How to avoid payday loans

It’s true that if you are self-employed, unemployed, or a student, you’re just as likely to need emergency loans as anyone else. However, when it comes to taking on debt, affordability is everything. Yes, lenders need to take steps to ensure you can repay a loan before offering it to you, but borrowers should also ask themselves if a loan is the right way to meet a short-term cost.

If you’re self-employed, it might be better to try to wait until you take your next wage, or until that outstanding invoice is paid. Before resorting to a borrowing, chase up any late payers and explore all your available options, especially if you’re trying to avoid payday loans and the potential risks involved if you can’t afford them.

Lenders will charge you a penalty if you miss repayments or are late making payments. So, it’s important to ask yourself – would you be able to afford the extra costs? And is it worth the risk?

A word of caution…

Taking out a loan when you're self-employed can be a helpful short-term fix, but it's not without its risks. When your income isn’t guaranteed each month, it's even more important to be sure you can afford the repayments before you borrow.

Missing a repayment could lead to:

• Additional fees, extra charges, and interest
• Damage to your credit score
• Added financial stress if your cash flow is already tight
• Pressure on relationships if a guarantor is involved
• Risk of losing assets with secured loans

That’s why it’s so important to only borrow what you need and know you can repay. Always be realistic about your budget, and don’t rely on money that hasn’t arrived yet, like pending invoices.

If you're ever struggling to make a repayment, don’t ignore it. Contact your lender as soon as possible. Many direct lenders, including Moneyboat, will work with you to find a solution. Support is there if you need it and asking for help early can stop a small problem becoming a big one.

If you’re a Moneyboat customer and you’re worried about making your repayments, contact us as soon as you can.

Support is out there

At Moneyboat, we care about helping people make the best financial decisions possible, even if we don’t offer loans for self-employed individuals. We hope this guide has helped you better understand your options. From lender requirements to exploring alternatives, there are routes to consider that can help provide the support you need, without taking on debt that you can’t afford.

If you want to strengthen your financial foundations and feel more in control of your money, our blog is packed with helpful resources. Learn how to create long-term financial goals, explore debt management plans, or find out what to do if you’re struggling to repay a payday loan.

And remember, if you’re struggling with debt or need personalised financial support, free and independent help is available. You can reach out to trusted organisations like StepChange, Citizens Advice, and MoneyHelper for expert guidance.

Whatever your situation, take your time, explore your options, and make the choice that works best for you.