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Personal Loans for Independent Contractors and 1099 Workers
At a Glance
- Independent contractors, or 1099 employees, are self-employed workers operating on a project-to-project basis.
- They enjoy flexibility but face financial challenges, including irregular income, self-covered expenses, lack of benefits, and limited job security.
- Independent contractor
loanscan help bridge financial gaps during slow periods, offering a solution for irregular income.
loanscan also be utilized for auto purchases, providing additional financial flexibility for independent contractors.
Being an independent contractor, or 1099 employee, has great benefits. You get to make your own hours and your income isn’t capped. If you are a 1099 employee you also know that life comes with its fair share of obstacles including, but definitely not limited to, financial stress.
Being an independent contractor means you aren’t guaranteed any monthly income. This can easily cause your income to fall short of your monthly budget when business is slow. If you have a family you have to take care of, this can be especially tough.
If you need to relieve some of your financial stress by taking out a loan, you might find the following information helpful. We explain how
What is an Independent Contractor?
A 1099 employee is a worker who is self-employed and works as an independent contractor. If you are a 1099 employee, it means you are not employed by someone, but you work independently on a project-to-project basis.
1099 employees can work in various fields fulfilling various functions including working as consultants, agents, and brokers
There are many perks to being an independent contractor. These perks include having freedom and being the boss of your own time. There are, however, also quite a few drawbacks – especially when it comes to finances.
What are the Financial Issues Facing Independent Contractors?
There are a few sticky points where being an independent contractor might mean some additional financial stress. Let’s take a look at the most common financial issues 1099 employees face.
Your Income is Not Guaranteed
Having independence with your time is great, but it also means you cannot depend on anyone to provide you with income. Your income as an independent contractor is directly related to the number of projects you do, so there is no guaranteed paycheck coming in every month.
Even if you have a few clients on a retainer basis (which provides a steady income) this stream of income can stop at any moment — even if you have a contract with them. The old saying is especially true for independent contractors — no work, no pay.
You Pay for Your Own Business Expenses
Being your own boss also means you have to pay for everything yourself. You don’t get the computer, office, stationery, phone, or anything else included as you would with a regular job. But on the plus side, paying for business expenses means you can deduct the cost from your taxes.
You do, however, still need to make the money first before you can buy these items or deduct them from your taxable income. Having to pay for everything yourself can easily be an added and unexpected burden for independent contractors.
You Have No Benefits Plan
Not being employed means you don’t get any employee benefits. Most employees will get benefits such as health care or a retirement and pension plan when they work for an employer.
Working for yourself means paying for all of these things on your own and not getting any employer contributions. This can get very expensive very quickly, and many 1099 employees aren’t prepared for this when they leave their steady jobs.
Job Security Is Not Guaranteed
Like we said above, most 1099 contractors don’t have regular fixed income retainers that provide them with a steady income. Even if you do have a proper contract in place, there is always the risk that the contract gets canceled. There is no labor legislation that would protect you in such an instance as it would if you were an employee. So being a 1099 contractor means you don’t really have any job security.
If you find yourself in a tight financial spot when business is slow or you are out-of-season, you can defend against a financial shortfall by taking out a personal loan for independent contractors. Taking out an independent contractor loan can help you meet financial obligations (like paying the mortgage) on time and also prevent critical services like health care from being suspended.
If things get really tough, you could even use your independent contractor loan to pay for your basic living costs and your family’s necessities. But, this should all be approached with some serious planning and regard for your future!
There are many lenders who offer
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Independent Contractors and COVID-19
While many employees in the U.S. are vulnerable to losing their jobs during the current COVID-19 outbreak, no workers are more vulnerable than independent contractors.
In addition to working on a case-by-case basis without a necessarily steady income, independent contractors can rarely afford healthcare coverage in the U.S. This combination of lack of work and lack of insurance can be very dangerous.
And with the current COVID-19 outbreak and it’s highly virulent nature, getting sick can lead to independent contractors being unable to work. Moreover, their lack of healthcare can mean longer recovery times and time away from work or worse.
It’s incredibly important, now more than ever, that independent contracts take the steps and measures to ensure their financial safety and for a potential health emergency.
Loans for Independent Contractors Checklist
Independent contractors, get your loan easily. Download our checklist for essential tips and a smooth process!Get the Checklist
5 Best Personal
Loans for Independent Contractors
Independent contractors face unique challenges when it comes to securing financial support, especially since their income may fluctuate and lacks the consistency of a traditional job. Personal
AmOne (Best for Okay to Good Credit)
AmOne is a great fit for independent contractors with okay to good credit ratings. They connect borrowers to a wide range of lenders, increasing the chances of finding a loan that matches their financial profile and needs. This can be particularly beneficial for contractors who need flexible loan options that align with their variable income patterns.
Loans (Best for Bad Credit and No Credit)
For independent contractors who have either not yet built a strong credit history or have faced credit challenges, Spring
First Premier Lending (Best for Bad Credit)
First Premier Lending specializes in providing loan options for those with bad credit, making them a viable option for independent contractors facing credit issues. Their understanding of unique financial circumstances means they offer
Upgrade (Best for Good to Great Credit)
Upgrade is an excellent choice for independent contractors who have managed to maintain good to great credit. They offer competitive rates and terms, which can be extremely beneficial for larger business investments or consolidating existing debts. Their straightforward application process and quick funding can be particularly helpful for contractors looking for efficient financial solutions.
BestEgg (Best for Good Credit)
BestEgg is well-suited for independent contractors with good credit ratings. Known for their quick and easy application process, BestEgg provides timely financial support, which is crucial for contractors who may need to respond swiftly to business opportunities or emergencies. Their competitive rates and strong customer service make them a reliable choice for contractors seeking to balance their business and personal financial needs.
Loans for 1099 Employees
Are there auto
While there are no official auto
And generally speaking, the loan terms on a personal loan will be more favorable than those on one from an auto dealership!
- Mortgages for 1099 Employees and Independent Contractors
- Auto Loans for 1099 Employees & Independent Contractors
- Personal Loan for Self Employed, a Guide
There is no need to worry too much if you’re an independent contractor and business dries up for a season. You can still take care of your family’s basic needs and meet your financial obligations by getting a personal loan for independent contractors. Applying is quick and easy. Instead of using your time and energy worrying about your finances, you can focus your attention on growing your business and getting new clients.
Plus, consider that finding the right loan is simpler than you think. Whether you’re in the market for a personal, payday, or any other loan, your ideal match is within easy reach. Check out Fiona to find your options and make the loan search process a breeze.
Frequently Asked Questions (FAQ)
Can Independent Contractors and 1099 Workers Get Personal
Yes, independent contractors and 1099 workers can get personal
What Documentation Do Independent Contractors Need for Loan Applications?
Independent contractors typically need to provide proof of income such as 1099 forms, tax returns, bank statements, and possibly a list of current clients or contracts to demonstrate income stability.
Are Loan Terms Different for Independent Contractors Compared to Salaried Employees?
Loan terms for independent contractors may vary compared to salaried employees, particularly if income is less predictable. Lenders might offer different interest rates or require a higher credit score.
How Do Lenders Verify Income for 1099 Workers?
Lenders verify income for 1099 workers through tax returns, 1099 forms, bank statements showing consistent income deposits, and sometimes contracts or client lists.
Can 1099 Workers Qualify for Larger Loan Amounts?
Qualifying for larger loan amounts depends on the lender’s criteria, the 1099 worker’s creditworthiness, income level, and ability to repay the loan.
Is It More Challenging for Independent Contractors to Get Approved for
It can be more challenging for independent contractors to get approved due to the variability of their income. However, a strong financial and credit history can improve approval chances.
Do Independent Contractors Pay Higher Interest Rates on Personal
Independent contractors may face higher interest rates if their income is considered less stable. Rates depend on the individual’s credit score and financial history.
What Types of Personal
Loans Are Available for 1099 Workers?
1099 workers can access a variety of personal
How Long Does the Loan Approval Process Take for Independent Contractors?
The loan approval process for independent contractors can vary, typically taking a few days to a few weeks, depending on the lender and the completeness of the application.
What Factors Should Independent Contractors Consider Before Applying for a Loan?
Independent contractors should consider their income stability, ability to repay the loan, the interest rate, loan terms, and how the loan fits into their overall financial plan.