Personal Loans for Independent Contractors and 1099 Workers

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 loans for independent contractors work and how they can help you.

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.

Independent Contractor Loans

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 loans for independent contractors. There are even some lenders who offer independent contractor loans to immigrants and visa holders.

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.

6 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 loans can be a crucial lifeline for covering business expenses, managing cash flow, or making necessary purchases. Let’s explore lenders who cater to the distinctive financial needs of independent contractors, taking into account various credit histories.

Spotlight Loans (Best for Bad Credit)

As independent contractors, individuals’ incomes may fluctuate, making it challenging to secure traditional loans. Spotlight Loans offers specialized loan solutions designed to accommodate unique financial situations, providing the support needed to achieve goals with ease.

Check rate on website

on website

Spotlight Loans

4.8

Stilt rating

Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.

Min. credit score

None

Fixed APR

6.63% and up

Variable APR

N/A

View details

Overview

• Minimum credit score: n/a
• Variable APR: 4.99% and up
• Loan amounts: $100 – $5,000
• Repayment: Depends on choice of lender

Qualifications

• Be 18 years of age or older
• Have a checking or savings account
• Have regular income
• Have a fair credit rating

Pros

• Spotlight Loans is willing to work with individuals who have less-than-perfect credit, making it a viable option for those who may struggle to secure loans from traditional lenders​​​​.
• Spotlight Loans offers same-day approval and funding, which is beneficial for those in urgent need of funds. This makes it a good option for emergency financial situations​​.
• Unlike traditional payday loans, Spotlight Loans provides the option to repay the loan over a period of months, offering more flexibility in repayment planning​​​​.

Cons

• One of the most significant drawbacks of taking a personal loan with Spotlight Loans is the potentially high interest rates. With APRs that can be much higher than traditional personal loan lenders, this can lead to substantial interest payments over time​​.
• Spotlight Loans offers loan amounts that are relatively low, which may not be sufficient for all borrowers’ needs​​​​.
• Spotlight Loans services are not available in all states, so it’s important to check if you reside in an eligible location before applying​​.

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.

Check rate on website

on website

AmOne Personal Loans

4.5

Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.

Min. credit score

600

Fixed APR

3.99%-35.99%

Variable APR

N/A

View details

Overview

• Minimum credit score: 600.
• Fixed APR: 3.99%-35.99%.
• Loan amounts: $1,000 to $50,000.
• Repayment: 1 to 7 years.

Qualifications

• Must be at least 18 years old.
• Must be a U.S. citizen or permanent resident.
• While there’s no specific income requirement, a consistent source of income is essential for the applicant.

Pros

• Suitable for individuals with lower credit scores.
• No cost for the matching service.
• Attractive loan rates.

Cons

• Acts as an intermediary, not a direct lender.
• Risk of multiple contacts from prospective lenders.
• Lack of clarity on lender details.

Spring 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 Loans offers a path forward. They focus on broader financial indicators rather than relying solely on credit scores. This approach allows contractors with less-than-ideal credit histories to access funds necessary for their business operations or personal needs.

Check rate on website

on website

Spring Loans Personal Loans

4.2

Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.

Min. credit score

None

Fixed APR

27.00%

Variable APR

N/A

View details

Overview

• Minimum credit score: None.
• Fixed APR: 27.00%
• Loan amounts: $3,000.
• Repayment: 48 months.

Qualifications

• Demonstrate a recurrent income.
• Minimum age prerequisite: 18 years.
• Validate U.S. citizenship status with an SSN.
• Provide a legitimate U.S. driver’s license or a state identity card.
• Establish a functional bank account for incoming deposits.
• Adhere to any specific demands by the loan provider.

Pros

• Open to applicants with any credit background.
• Four-year loan period aids in structured financial management.
• The $3,000 offer addresses several short-term financial challenges.
• Wide-reaching eligibility criteria invite a broad spectrum of applicants.
• The focus on dependable income over job title benefits varied income sources.

Cons

• The set 27% APR is higher than many alternatives.
• Restriction to a $3,000 loan might not cover all financial outlays.
• Possessing specific IDs is mandatory, sidelining some applicants.
• A prerequisite for an ongoing bank account may limit certain users.

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 loans that consider more than just credit history, which can be ideal for contractors needing financial support to sustain or grow their business.

Check rate on website

on website

First Premier Lending Personal Loan

4.2

Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.

Min. credit score

None

Fixed APR

27.00%

Variable APR

N/A

View details

Overview

• Minimum credit score: None.
• Fixed APR: 27.00%.
• Loan amounts: $3,000.
• Repayment: 48 months.

Qualifications

• Maintain a consistent source of income.
• Must be at least 18 years of age.
• Possess valid U.S. citizenship and a legitimate social security number.
• Hold a current U.S. driver’s license or state-issued ID.
• Keep an active bank account for direct deposit.
• Satisfy any lender-specific criteria, such as credit rating, borrowing history, or place of residence.

Pros

• No minimum credit score requirement allows accessibility for those with varied credit histories.
• 48-month term provides clarity and allows for long-term financial planning.
• Specific loan amount of $3,000 can meet many short-term financial needs.
• Broad set of qualifications make the loan accessible to a wide range of people.
• Emphasis on consistent income, not necessarily employment type, allows flexibility for borrowers.

Cons

• A fixed APR of 27% is relatively high.
• Loan amount is capped at $3,000, which might not cater to larger financial requirements.
• Requirement of a U.S. driver’s license or state-issued ID could exclude some individuals.
• Mandatory active bank account could be limiting for those who are unbanked.

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.

Check rate on website

on website

Upgrade Personal Loan

5.0

Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.

Min. credit score

560

Fixed APR

8.49% - 35.99%

Variable APR

N/A

View details

Overview

• Minimum credit score: 560
• Fixed APR: 8.49% – 35.99%
• Loan amounts: $1,000 to $50,000
• Repayment: 3 to 5 years (7 years on some larger loans)

Qualifications

• Possess an active bank account.
• Able to provide a legitimate email address.
• Minimum age requirement: 18 years (19 for Alabama residents).
• Credit score of 600 or higher.
• Annual income of $25,000 or more.

Pros

• Willing to accommodate borrowers with a credit score as low as 560.
• Offers flexibility with a range of loan amounts from $1,000 to $50,000. This can be suitable for both small and large financial needs.
• Provides options for repayment, allowing borrowers to choose a timeline that best suits their financial situation.
• Once approved, borrowers can access funds in just one day, which is useful for urgent financial needs.

Cons

• Origination fees can go as high as 9.99%, which might add a significant cost to the loan.
• Apart from the origination fee, there are fees for late payments and failed payments, which can add up if one is not careful.
• While there is an option to extend repayment for larger loans up to 7 years, it’s not standard for all loan amounts.

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.

Check rate on website

on website

BestEgg Personal Loan

4.5

Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.

Min. credit score

600

Fixed APR

8.99-35.99%

Variable APR

N/A

View details

Overview

• Minimum credit score: 600.
• Fixed APR: 8.99-35.99%.
• Loan amounts: $2,000-$50,000.
• Repayment: 3 to 5 years.

Qualifications

• Targets borrowers with good to excellent credit; fair credit may qualify.
• Minimum credit score of 600.
• At least two years of credit history.
• Minimum annual income: $3,500 from various sources like employment, alimony, and more.
• Debt-to-income ratio: 40%, or 65% when including a mortgage.
• Must be a U.S. citizen.

Pros

• Soft credit check available for pre-qualification.
• Offers a diverse spectrum of loan amounts.
• Provides options for secured loans.
• Direct payments can be made to creditors for debt consolidation.
• Late fees are not charged.

Cons

• Charges an origination fee.
• Doesn’t offer rate discounts.
• Initial payment date isn’t customizable.
• Lacks a dedicated mobile app for loan management.

Auto Loans for 1099 Employees

Are there auto loans for the 1099 employees? Yes and no.

While there are no official auto loans designed specifically for contract workers, a personal loan (like the ones mentioned above) can be used however the borrower wants to use the funds. So, if a 1099 worker decided to take out a personal loan to purchase a car, they would absolutely be able to do that.

And generally speaking, the loan terms on a personal loan will be more favorable than those on one from an auto dealership!

Read More

• Mortgages for 1099 Employees and Independent Contractors
• Auto Loans for 1099 Employees & Independent Contractors
• Personal Loan for Self Employed, a Guide

Conclusion

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 Loans?

Yes, independent contractors and 1099 workers can get personal loans. Lenders consider various factors including income stability, credit history, and debt-to-income ratio for loan approval.

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 Loans?

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 Loans?

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 loans, including unsecured personal loans, secured loans, and lines of credit, depending on their financial profile and creditworthiness.

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.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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