Questions about getting a loan while self employed.

Hi,

I am about to be a full-time webmaster.... I have a question about being self employed and getting loans.

I have set up a corperation and am thus starting to pay myself a wage... I create paystubs once a month from the corperation. For all intents and purposes I am an employee of said corperation and am not self employed. My question is do banks look into the employer's history when getting loans? Or would these paystubs work as proof of full time income?

I'm asking this cause banks are harder on "self employed" people than regular full-time employees.

Thanks in advance...

 

Banks are defianately much stricter on self-employed personels.

I think that you would be quite alright with your payslips (paystubs). As far as they know you work for the company, they dont have to know you own the company. I would say you have nothing to lose by tryin but i believe they can mark you down if you repeatedly try and get loans and get refused.

One idea would be to go into a bank or loan place and speak frank and openly with them and see what they say. If it looks doubtful you can try somewhere else with a different approach.

 

Be sure you can spell corporation before you ask for the loan too. That helps.

 

If you are self-employed, a business loan is very hard to get. I tried and couldn't get one. Its easier if you have inventory, property or something that the bank could base a loan upon. I think SBA is a place to look for a low interest start up loan.

There's lots of advice out there, researching it is really the place to start. Calling the SBA can't hurt either and trying to get information from them.

 

Good luck, i can't even qualify for a home equity loan on my house that is 50% paid off since I became self employed this year.

 

How are you incorporated, swordfish? Or are you? If you are incorporated, then being self employed (thru the corporation) is not an issue in getting a loan. As long as there is a verifiable income source (tax returns, etc) that is all that matters.

 

I run a LLC, and just went full time back in January. I don't have any tax records or such to prove a solid income. In a year or 2 I should qualify with flying colors, however I dont need a loan.

 

How's the business going, I am also a full time web master that left my day job back in January to pursue a career in marketing..

 

Business is really great... Making about 5 times that of my fulltime day job. That is why I am taking the jump to work for myself. I decided to relocate to a larger town so that I can get some local business as well.

I am thinking of giving this a try. Creating professional paystubs from the corporation to myself and see if they will consider this full-time employment. For IRS purposes I am both a corperate owner and an employee of said corp.

And yeah, I have to make sure I spell it correctly on the paystub..

 

You are oviously in the US. IN the Uk if you own more than a set% of the company then you are treated as self employed for financial purposes.

 

I went for my first house in 2002. I was self-employed(president of my own corporation). The seemed like they didn't care, since I showed w-2's they acted like I was a regular joe with a job, and stock div's to boot. Things went so smoothly, I was able to get a better loan agreement. 90% financed (broken into 80% first mortgage, 10% second mortgage), which means not having a first mortgage >80%, I avoided PMI. That's a several hundred a year savings, and no escrow requirements.

So, IMHO, I would have more than 2 years tax returns ready, and have your credit history cleaned before you ask for a home loan.

Now as for a business loan. Never had problems with this either, because my business stuff seemed to always be 'co-signed' by myself. So in truth, the actual promise to repay falls on my personal shoulders, and the bank agreement perces the corporate vale; so they are often happy to loan money.

hth,

tom

 

Having the coporate veil pierced, to my thinking, negates the benefits of incorporation.

 

Ah, yeah. That's the point.

Caveman, and for others, your corporate veil is easy to pierce, that's why it's called a 'veil' not a 'brick wall' or 'line of death'. So if you run you corporation like a boob, don't keep records, crap on customers and lenders. The state and fed don't see the veil, and the veil will only consume a couple of minutes of a good lawyer to shred it to crap.

So, treating liabilities like they should be, unrealized returns, you manage your finances better.

hth,

tom

 

Sounds great that you are doing that much better. I was doing pretty good at my day job back in January 05, left to go full time for myself.

Since than it has been a rollercoaster, busy some weeks, nothing the next.

I haven't done any real advertising yet, just a small link on the bottom of my clients sites.

I plan to do some print ads soon...

Good Luck