How to Get Personal Loan for Self-Employed in India?

personal loan

As a business proprietor, immediate access to funds with minimal documentation, quick processing, and prompt disbursal is crucial. Instant personal loan for self-employed individuals offer an excellent solution to address immediate financial needs. Managing the financial aspects of owning or starting a business can be a significant responsibility. Obtaining timely financial assistance can safeguard your savings from other substantial expenditures. Hence, instant personal loan for self-employed act as a valuable financial support system during critical circumstances.

Self-employed individuals often harbour doubts about the approval of their personal loan applications. Historically, banks and financial institutions have shown a preference for loan applications from salaried individuals affiliated with established companies. However, the landscape has evolved.

Today, self-employed individuals can easily secure personal loans for themselves. The documentation requirements and eligibility criteria may vary for self-employed persons, and we will delve into personal loan for self-employed details in today's blog.

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What Do You Mean By Personal Loans For Self-Employed Individuals?

A personal loan for self-employed individuals is primarily sought to facilitate business expansion, settle debts, or fulfil working capital requirements. Instant loans for self-employed are sanctioned for both startups and well-established firms with years of operation. Regardless of the fluctuations in the business journey, a self-employed personal loan serves as a financial tool to maintain cash flow and support business growth. Working capital loans for self-employed prove beneficial for the day-to-day operations of a business.

A personal loan for self-employed individuals serves various purposes, including covering expenses for vacations, weddings, and other immediate needs like medical bills, overheads, or unexpected repairs. The interest rate and loan approval depend on the owner's financial history and the stability of the business. A personal loan for self-employed, ranging from Rs.50,000 to 5 lakh, is ideal for meeting daily business expenditures.

Rather than facing bankruptcy or enduring financial losses in business, opting for a self-employed personal loan is a prudent choice. The approval process is collateral-free, swift, and involves minimal documentation. The most efficient method to apply for loans for self-employed is by downloading a reliable instant personal loan app.

Features & Benefits of Personal loan for self-employed

Let's explore some of the features and advantages that distinguish a personal loan for self-employed from other personal loans available in the market:

  • Attain instant approval for a substantial personal loan for self-employed, up to ₹2.4 lakhs, with no restrictions on the utilization of funds.
  • Secure a prompt personal loan online from a loan app with a streamlined disbursal process. Meet the eligibility criteria, provide the necessary documents, and receive swift loan approval, with funds disbursed within a few hours.
  • The application process for a personal loan for self-employed with a loan app is swift and uncomplicated. You can effortlessly apply for an instant personal loan through our app and receive immediate approval.
  • Repay the loan amount with ease through flexible EMIs tailored to your convenience. The repayment tenure ranges from 6 to 48 months for new applicants and 9 to 51 months for existing customers.

Eligibility Criteria for Personal Loan for Self-employed Individuals

  • Self-employed loan eligibility requires you to be a self-employed individual, either in a professional or non-professional capacity.
  • You must be at least 21 years old to qualify.
  • A minimum credit score of 750 or higher is necessary.
  • Your annual income should meet the bank's specified self-employed loan eligibility criteria.
  • Your business should have been operational for a minimum of 2 years to be considered eligible.

Documents Required for Loan Application

  • Completed application form accompanied by passport-sized photographs
  • Identification Proof: PAN Card, Aadhaar Card, Driving License, Voter ID Card, Passport, etc.
  • Address Proof: Utility Bills (Phone Bill, Electricity Bill, etc.), Ration Card, PAN Card, Voter ID Card, Aadhaar Card, etc.
  • Business Proof: Evidence of Business Existence, Certificate of Registration, Certificate of Incorporation with the relevant Registration Body
  • Income Proof: Certified Profit and Loss Statement, Income Tax Returns for the past 2 years
  • Any additional documents as stipulated by the bank

How To Apply For A Personal Loan For Self Employed?

In the present day, obtaining a personal loan for self-employed individuals has become exceedingly convenient and can be accomplished from the comfort of your home. You can effortlessly visit the lender's website and complete the personal loan application form. Additionally, you have the option to physically visit the lender's branch and submit your personal loan application. However, prior to initiating your application, it is essential to go through the following steps:

  • Step 1: Calculate how much you need

    It is crucial to have a precise understanding of the amount you require for your personal loans for self-employed. Begin by identifying the specific purpose for which you need the personal loan and calculate the corresponding amount. The required sum may vary depending on the nature of the expense. For instance, if you intend to fund a vacation, you may need Rs. 5 lakhs. Conversely, if the purpose is to finance a wedding, the expenditure might escalate to around Rs. 10 lakhs.
  • Step 2: Check Your Loan Eligibility

    Once you have a clear understanding of the desired amount of personal loan for self-employed, you can assess your self-employed loan eligibility for this specific sum. Online, you can utilize a loan eligibility calculator available on the lender's website. Alternatively, you can visit the lender's branch, furnish relevant documents, and undergo a check for eligibility. Factors such as your income, credit score, and the requested loan amount will influence your loan eligibility.
  • Step 3: Calculate EMI

    After confirming your eligibility for the instant personal loan for self-employed, the subsequent step is to select an appropriate Equated Monthly Instalment (EMI) option. Your EMI represents the monthly repayment amount for the loan. It is crucial to choose an EMI that aligns with your income, striking a balance between not being burdensome and not being too minimal, which could result in an extended tenure and increased interest.
  • Step 4: Gather Documents and Apply

    After completing the aforementioned steps, organize your documents systematically in a file. Subsequently, approach the lender to submit your application. Self-employed individuals have the option to apply for loans for self-employed through a third-party financial services website, the lender's official website, or by visiting the lender's office in person.

Factors Influencing Personal Loans For Self Employed

  • Eligibility Criteria:

    Ensure that you fulfil the eligibility criteria established by the lender.
  • Credit score:

    The credit score is a crucial factor that lenders use to evaluate your repayment capability. Given that personal loans are unsecured and self-employed individuals may not have a consistent income source, a good credit score positions you as a low-risk borrower. A credit score of 750 and above is deemed excellent. With such a score, you can access personal loans with favourable interest rates, attractive loan amounts, and numerous pre-approved offers and deals.
  • Interest Rate:

    The interest rate is a pivotal factor that will impact your personal loan Equated Monthly Instalment (EMI). A higher interest rate translates to a higher EMI. Interest rates differ among lenders. Therefore, it is advisable to compare interest rates and opt for the one with a lower rate if the other terms of the loan align with your preferences.
  • Personal Loan Cost:

    Lenders impose several additional fees such as processing fees, prepayment charges, penal charges, legal fees, payment dishonour fees, loan rescheduling charges, etc. When combined, these charges can escalate the overall cost of your personal loan. Hence, it is essential to thoroughly examine the various costs when comparing different personal loan options.
  • Ensure Your Repayment Capacity:

    Self-employed Individuals may lack a consistent income stream. Repayment for an instant personal loan for self-employed designed for the self-employed is typically done through Equated Monthly Instalments (EMIs). Hence, it is advisable to calculate your EMIs before proceeding with the loan application. Utilizing a personal loan EMI calculator simplifies this task. Simply input the amount, interest rate, and tenure, and the calculator provides an instant result.
  • Relationship with the Bank:

    If you have an established relationship with the bank, they might offer you lower interest rates on your personal loans. Typically, banks extend preferential interest rates and special offers to customers who have a credit history with the institution.
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If you need funds to address personal or business needs, consider obtaining a personal loan tailored for self-employed individuals. However, ensure that you meet the eligibility criteria and have all the necessary documents ready before applying for a personal loan for self-employed.

Frequently Asked Questions Expand All

Taking a personal loan for self-employed individuals can be beneficial as it comes with appealing features. For starters, you may use the sanctioned fund to fulfil personal desires like home renovation, weddings, medical emergencies, travel etc., without facing any restriction. Moreover, it is easy for self-employed individuals to apply for a personal loan because you do not have to pledge any of your assets as security. With this loan, you can meet your personal or professional requirements without any liquidate or asset investments.

Income Tax Return (ITR) serves as proof of income for both self-employed professionals and non-professionals. Consequently, if you have not filed an ITR, you may not meet the eligibility criteria for a personal loan from a major bank. However, you could explore options with Non-Banking Financial Companies (NBFCs), as they might offer personal loans without requiring income proof.

Yes, all lenders typically require a processing fee, usually starting from 1% of the sanctioned loan amount plus GST. This fee is non-refundable and may vary among different lenders.

To submit an offline application for a personal loan for self-employed individuals, you can either visit the nearest branch of your chosen lender, leave an online query with their loan department, or contact the prospective lender's customer care department by phone.