Payday loans are designed for employed professionals. A borrower may be employed part-time or fulltime. The income will be the primary qualifying criterion. This is of course after other basic eligibility criteria are satiated. For instance, only adults can apply for payday loans. One would have to be a resident of UK to apply for unsecured short term loans through Payday Pug. Borrowers should have a valid address and a bank account. It cannot be an offshore bank account. The address and other personal details should be verifiable. A proof of identification is hence an imperative requirement. The income will determine whether or not a borrower qualifies for a particular loan amount.
Since payday loans are approved on the basis of income from employment, self employed professionals and entrepreneurs or business owners should not qualify for such short term loans. This is in theory. The practice is not as per the expected rule book. Many lenders of payday loans will not accept applications from self employed people and those running a business. However, some lenders will be more lenient and will accept such applicants. The only difference in such applications will be the proof of income. Employed people can use their pay slips or other proofs of income as provided by the employer. Self employed professionals and business owners will not have a pay slip but they would still have a bank account. The bank account statement can be the proof of income, although it would actually reflect revenue and not necessarily profit or personal earning.
When you consider the broader spectrum of short term loans, secured or unsecured, bank statements are accepted as a proof of income or financial ability to repay. Payday loans are not meant to consider bank statements for self employed professionals and entrepreneurs or business owners. Hence, there is no guarantee that such a proof will be accepted. But there are variations in the private lending industry and some lenders are indeed receptive of such applications. Your task will be pretty simple. You would need to focus on lenders that have a history of accepting applicants who are self employed or are running a business.
In case of self employed professionals and business owners, credit history or credit score may have a more pronounced role to play in the whole process. It is well known that payday loans are available to borrowers with bad or poor credit. Even if lenders conduct a credit check, the loan is not denied on the basis of credit score. Some lenders will offer a smaller loan amount and may levy a higher rate of interest. This is not very different from how banks and other financial institutions work. However, banks generally turn down applications wherein the credit score is very poor or substantially below average. The credit score may become a significant criterion for self employed professionals and business owners. This is not a given but lenders will want to play it safe and credit history does offer them the kind of assurance they need.
Payday loans have stringent repayment terms. They have the shortest repayment periods among short term loans. While a car loan is also a type of short term loans, it does have a repayment period of three years to five years. Payday loans will have a repayment period of three months up to eighteen months. The payday loans available to self employed borrowers and entrepreneurs or business owners may not have a very long repayment period and there could be a higher rate of interest. However, in scenarios where the bank statement establishes a steady and substantial income, the rate of interest can be the same as is offered to employed borrowers.
Payday loans are unsecured so businesses cannot use any asset as security or collateral. There is no provision of accepting such collateral but some lenders of payday loans may be willing to consider some form of security to approve the application. This is not a standard practice in the industry. Private lenders have some discretion and it is usually more flexible than what banks exercise. You may be in luck when you apply for short term loans or payday loans through Payday Pug.