The pandemic has given an additional push to the growth of the so-called gig economy. This term refers to independent work offered by both businesses and individuals through various digital platforms. As the number of gig workers increases, so does their general demand for loans and financing, including loans for gig workers and gig economy loans.
In the gig economy, workers can find clients who offer them freelance work and one-time tasks. Gig workers can choose the amount of work flexibly and sell their services to multiple clients. Some of these independent workers use gigs as their primary source of income, while others see it as a way to supplement their existing salary, exploring options such as instant line of credit for gig workers or small business loans for gig workers.
Here are some examples of gig work:
Like many people who work in the gig economy, you may wonder about the accessibility of loans for gig economy workers, especially when comparing your chances to those of traditional employees with a stable monthly salary. This article will provide you with the most up-to-date information on taking out a loan for gig workers, including potential options for loans for gig workers with bad credit.
Here are some interesting statistics on the increasingly relevant role of the gig economy and the scope of gig workers loan options in 2023:
This data shows us that gig workers, and freelancers in general, have become an integral part of our economy. As a result, many lenders are now looking at this group as a pool of potential clients for gig economy loans.
The general tendency among banks and other financial institutions is to associate gig workers with high financial risk. This perception affects the availability and terms of loans for gig workers, installment loans for gig workers, and even personal loans. Here are the reasons behind this trend:
As a result, gig workers may face additional difficulties when applying for a loan. Other factors can also exacerbate this situation when seeking loans for gig workers. For example:
Nevertheless, it’s still possible for gig workers to obtain gig economy loans by looking for the right products, selecting the right lenders, and making the right moves, even when looking for loans with bad credit.
As a gig worker or freelancer, you are legally running a small business. This applies even if you don’t have any employees, don’t have a separate business address, and don’t plan to expand your business in the future while seeking small business loans for gig workers.
Having this status alone increases the chances of obtaining credit cards aimed at small business owners when exploring funding for gig workers.
Focus your search on business credit cards with low fees and attractive rewards programs for a wide range of business costs. Applying for cards with high fees and high spending requirements is not advisable when your income as a gig worker is not significant.
Personal lines of credit are also a valid option to consider for gig workers loan seekers. They tend to have lower interest rates and simpler repayment terms than credit cards, especially when offered by online lenders offering instant line of credit for gig workers.
Without a predictable income and employer benefits, taking out a mortgage as a gig worker in 2023 may require a bit of extra effort. Unlike traditional employees, gig workers can’t provide a W-2 or a paycheck as proof of income when applying for loans for gig workers 2023. Therefore, they must resort to alternative ways to prove to lenders that their income is both high and stable enough.
Here are ways to improve your chances of obtaining a mortgage and finding reliable loans for gig economy workers:
There is never a 100% guarantee that your mortgage application will be successful when seeking mortgages for gig workers. However, these steps significantly increase your chances of obtaining a mortgage as a gig worker or freelancer.
When applying for personal loans for gig workers, having a stable income is one of the main deciding factors. Yet this doesn’t preclude gig workers and other self-employed individuals from taking out installment loans for gig workers.
While traditional banks may be more reluctant to accept your application, online lenders are usually more flexible. Moreover, they tend to provide personal loans at lower interest rates and fees. Level Lending, for example, offers personal loans between $5,000 and $55,000 at very attractive conditions.
A personal loan can be very helpful for gig workers and freelancers who need to cover initial start-up costs. Here are some examples:
In each of these scenarios, and in many others, personal loans can help you cover expenses without having to wait for months until you save enough money.
Make sure you can prove your income is stable enough (e.g., tax returns or bank statements), and try to maintain a good FICO score when looking for bad credit loans for gig workers. This will greatly increase your chances of obtaining a loan with an online lender offering loans for gig workers with bad credit.
If you have more doubts or questions, call Level Lending at 888-922-4015. Our staff will advise you in detail on everything you need to apply for a personal loan as a gig worker.
If you are encountering difficulties taking out a credit card, mortgage, or personal loan as a gig worker, you can resort to secured loans when looking for alternative gig workers loan solutions. They allow you to borrow money using monetary or physical assets as collateral. These loans and lines of credit tend to have less strict credit checks than unsecured loans when it comes to loans. There are various types of secured loans:
Their main drawback is that you risk losing your asset if you can’t pay back your debt, a risk inherent in many loans.
Having a co-signer (e.g., a parent, sibling, or spouse) can provide additional guarantees to lenders offering loans for gig workers, who may give lower importance to your irregular freelance income as a result. A co-signer will assume the responsibility of paying back the loan (or covering missed payments) in case you cannot do so.
If you need money to cover relatively small purchases, POS lenders can be the right solution for you when seeking instant solutions like installment loans for gig workers. They allow you to borrow a certain sum of money during check-out and pay it back later (for example, in 4 biweekly installments). Most of these lenders, like Klarna or Afterpay, charge no interest at all for their POS loan services, providing viable options for gig workers loan seekers.
POS loans are ideal for gig workers who buy services and products online to use them as part of their job, offering flexible solutions similar to installment loans. You can use them to buy a photo camera from an electronics store if you do photography gigs or items to decorate your Airbnb apartment at an online furnishing store.
Read more: The Pros and Cons of POS Lenders.
If you face issues with late-paying clients when running a small business, you can look for factoring companies. They will buy your unpaid invoices (usually at a discount), allowing you to maintain a steady inbound cash flow, a crucial aspect to consider when looking for funding for gig workers.
Alternatively, you can obtain a loan by using your invoices as collateral, a strategy often utilized when seeking loans for gig workers. This type of loan allows you to borrow money against the sum that you are owed by your customers. Different lenders offer different rates and fees, so compare the various options before choosing an invoice financing provider when looking for gig economy loans.