One of the most fundamental details that all banks will look for in all loan applicants is a steady, dependable income. The amount of this income will decide how much the applicant will be granted. If there were no dependable income, then on the face of it, it would appear to a lenders calculation, that the loan amount should be zero. This is the traditional method of calculating personal loans.
Self Employed Business Loans
Business loans are calculated on a different basis. They do not need to show guaranteed income. In fact to do so would be impossible for most business. So banks came up with an alternative way of calculating business credit worthiness. This involved assessing past earnings, assets, debt and liabilities. A similar model is now in place for self-employed loan applicants. Instead of showing them evidence of your salary, you can instead show the bank what business youre in, how much youve been earning and for how long, how the business is likely to continue and current debts and liabilities. All of this information will then go into assessing your income, your risk, and how much you can afford to borrow.
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