Loans for Gig Workers
10 Min Read
- What Exactly Is A Gig Worker?
- What Financial Issues Is the Gig Economy Facing?
- What Are Loans for Gig Workers Available on the Market?
- How Can Freelancers Use a Loan?
- Who Qualifies for a Cash Advance?
- Eligibility Criteria
- How Do You Prove Your Income as a Gig Worker?
- How Much Can You Borrow as a Gig Worker?
- What’s the Application Process for Loans for Gig Workers?
- Our Main Benefits
What Exactly Is A Gig Worker?
A gig worker is essentially an independent contractor who doesn’t get a regular monthly salary and benefits from one employer. Instead, gig workers are usually paid by the hour/project and collaborate with one or several companies. Their short-term contract work offers them more flexibility in terms of personal time planning. The category includes a wide range of workers, from small business owners to ride-share drivers, delivery people, freelance designers, etc.
What Financial Issues Is the Gig Economy Facing?
Like the employees from other industries, the representatives of the gig economy may struggle financially. The unstable character of their jobs is a risk for both freelancers and potential lenders. Loan providers often ask for proof of employment, which may be another issue for contract workers. On top of that, a gig worker doesn’t always have the credit score required by traditional lenders.
In a nutshell, it isn’t easy for gig workers to access loans. It can be frustrating as emergencies happen to everybody, regardless of industry. Fortunately, there are enough loan options to choose from, even when you have a non-standard job. If you are only starting your freelancing experience, consider the three main legal aspects that will help you keep your papers organized and access loans if you need them.
What Are Loans for Gig Workers Available on the Market?
Self-employed individuals can access multiple loans, including personal loans, payday loans, lines of credit, microloans, and more. Depending on the exact circumstances you have as a freelancer, some financing options may suit you better than others.
Traditional Personal Loans
A conventional personal loan is an option that allows eligible borrowers to get up to $50,000 at reasonable loan terms. Personal loans for gig workers are offered by traditional financial institutions, like a bank or credit union. Those who want to get a personal loan need to be ready to pass a hard credit check and have a good credit score.
Personal Installment Loans
A personal installment loan is a type of borrowing with a flexible payment schedule. It works similarly to a traditional personal loan but doesn’t require gig workers to have an ideal credit history. If you opt for installment loans with bad credit, you may borrow up to $5,000. You would pay back your debt in fixed monthly installments within 2 to 24 months.
Lines of Credit
If you don’t know how much money you need, a revolving line of credit may be a better loan alternative. There is a predetermined limit on these loans. You borrow as much as you need, then only pay interest for the sum of money you withdraw. Additionally, an interest-free promotional period can be offered.
Credit Card Cash Advances
A credit card cash advance allows gig workers who already have credit cards to withdraw money from their credit balance. This means that a credit card holder can borrow money against their credit limit. The funds can be repaid either in one lump sum or by making minimum payments. However, interest on a credit card cash advance will accrue immediately.
Payday loans are small dollar loans of $500 or more that you can take with minimal requirements. It is typically possible to borrow up to $1,000 from direct payday lenders within one business day.
A payday loan is also called a fixed-rate loan, as opposed to variable rates of mortgages and credit card loans. As soon as you receive your next paycheck, you have to pay back your debt plus interest.
Microloans are convenient for new businesses that don’t need much funding. You can borrow up to $5,000; collateral may be required. Microloans are very accessible, especially through the US Small Business Administration or Non-Governmental Organizations.
Business Cash Advance Loans
Also known as a small business loan, a business cash advance is a form of borrowing that gig workers can use to develop their businesses. Not all gig workers will qualify for a business cash advance. If you have enough business income to prove it’s going well, you may be eligible. Additionally, small business owners must demonstrate a clean tax history.
Merchant Cash Advances
A merchant cash advance is a loan that you repay, together with interest, from your future sales. With this type of loan, your credit card serves as collateral. You would repay your debt on a weekly or daily basis.
If you are a car owner, you can borrow money by using your vehicle as collateral. A car loan is helpful if you need cash fast.
How Can Freelancers Use a Loan?
Self-employed workers can use loans to solve personal financial emergencies or cover business expenses. In the majority of cases, a freelance worker applies for various financing options to pay for:
- rent, buy groceries or a new laptop;
- home office improvements;
- gas, car maintenance, and repair services;
- office equipment and utility bills;
- promoting their small business (marketing, website, and business card making), etc.
Also, we suggest freelancers apply for home improvement loans in case they need to renovate their houses. It will help control the budget and not get into a debt cycle.
Who Qualifies for a Cash Advance?
Most people, including contract workers, can qualify for a payday loan. As long as an applicant meets the main eligibility criteria, receiving a cash advance is simple. Most categories of freelancers can apply for a payday loan.
Sellers and Owners of Franchises
- Amazon, eBay, Etsy;
- Dominos, Baskin Robbins, Dunkin’ Donuts;
- Avon, Mary Kay, Amway.
Freelance Platform Workers
- Fiverr, UpWork, Freelancer;
- Toptal, PeoplePerHour.
Driving or Taxi Services
App Delivery Services
- DoorDash, GrubHub, Slice, Instacart;
- UberEats, Caviar, Postmates, Shipt;
- Deliveroo, Tapingo.
Small Business Owners
- Beauty Salon;
- Cleaning Services;
- Catering Services.
- BBusiness Consultants, Event Planners;
To qualify for a payday loan, a candidate must:
- Be at least 18 years old;
- Hold a US citizenship or a permanent resident status;
- Apply in their state of residence;
- Have an active bank account (a checking account will work just fine);
- Share a valid phone number and email address for communication purposes;
- Have a steady source of income and prove it.
Independent contractors don’t always have a steady source of income. If you are on unemployment benefits or disability benefits, you can still qualify for some loan options. Having a good credit score is not a requirement.
How Do You Prove Your Income as a Gig Worker?
Gig workers must pay their taxes. Typical employees get their taxes deducted from their salaries. However, independent contractors have to save for and pay their taxes annually, according to the IRS specifications for gig workers. Some lenders will accept alternative proof of income. Most will accept one of the following options:
- Pay stubs;
- Monthly bank statements as proof of your employer/customers regularly paying you;
- Your tax return from the previous year;
- Proof of income letter, which an employer or accountant can write. It usually requires additional supporting documents;
- W-2 form on wage and tax statement;
- Unemployment or disability benefits;
- Form 1099 on wage and tax statements for self-employed people.
In some cases, your lender may also accept screenshots from your dashboard, where your earnings are displayed. This may work for an Uber driver or app delivery people. The safest way to determine what exactly will work with a particular lender is by asking them directly what proof of income they accept.
How Much Can You Borrow as a Gig Worker?
This depends on the type of loan you choose. If you apply for a payday loan online, the maximum amount is typically up to $1,000. Depending on your state and income, a direct lender may offer you a smaller amount.
If you need a higher amount, you can consider an installment loan or a traditional personal loan. These financing options allow you to get up to $5,000 and up to $50,000 relatively.
If you’re going to apply for a credit line, your credit limit will be determined based on your income. A credit card cash advance is available within your credit limit too. Other forms of debt typically use your income to calculate the maximum loan amount you can get. For secured options, your collateral value can also play a role.
What’s the Application Process for Loans for Gig Workers?
There are two options available for gig workers. You can apply online or consider a storefront application.
Applying online is safe and fast. You may use your personal computer, tablet, iPhone, or smartphone to complete the application form. You will be done in no time. Moreover, your data will reach all the direct lenders in our network if you apply with us. To request a loan online, you will need to go through a few simple steps:
- Apply. Fill out our application form and hit Enter to submit it.
- Get Approved. If you qualify, you will receive almost instant approval from one of the lenders in our network.
- Receive Funding. Access your money as soon as one business day after signing a loan agreement.
However, not all loan options provide an online application process. This way, you will be asked to gather all the required documents and visit a lender’s store with them.
Our Main Benefits
- Data Protection
- Funding of up to $5,000
- Easy Application
- Almost Instant Loan Decision
- 80% Approval Rate
- Trusted Lenders Only
- Access to Funds Within One Business Day
Can I apply for a loan with bad credit?
Yes, some types of loans are available even with a bad credit score. Most innovative direct lenders do alternative soft checks instead of hard pulls that are performed by traditional lenders. Thus, loans offered by them can be obtained with any rating.
Can I qualify for a loan as an independent contractor?
Yes, an independent contractor may qualify for multiple types of loans on the condition that they meet the basic requirements.
How much can I borrow as a gig worker?
A gig worker may get a payday loan of up to $1,000, a personal installment loan of up to $5,000, or a traditional loan of up to $50,000. The exact amount depends on your state, the lender, and the details you provide.
Is my information safe?
Yes, when you apply through our website, we ensure the safety of your data at no additional cost. Your information is confidential throughout the application process and afterward.
Do I need income proof for a gig worker loan?
Yes, you will need proof of income to qualify for any type of loan. Direct lenders check an applicant’s debt-to-income ratio to estimate if the borrower will be able to repay them.
Where can I apply for cash advance loans?
You can request a cash advance loan online through our website. The process is straightforward. All you need to do is to complete the application form and wait for the approval.
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