If you've landed on this page, you're probably planning to start your own freelance service business. And you know what? It's a great idea.
You see, freelance business owners are seen as sole proprietors of their startups. Unlike other legal property structures, you don't have to be worried about extra legal fees or tax requirements in this case.
Meaning, freelance businesses are the least expensive properties considering the lack of legal hassle.
Besides that, freelancing attracts people who aim for independent working conditions, attributing to the gig economy's current boom.
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Current statistics show that more than 53 million Americans work as freelancers. But freelancers looking to widen their horizons and reach further find themselves in a dire situation.
Why? It's simple; freelance businesses are seen as high-risk commodities, making it difficult for them to secure traditional loans.
Wait, don't get disheartened just yet. Online lenders are excellent alternatives for providing flexible and accessible loans for freelancers. If you are using a freelance website, you may also show demonstrated earnings for your business to get a better rate on your loan.
Here's our list of online lending options you can choose from to fund your freelance business today.
Personal business loans are the best options for small business owners who don't qualify for traditional business financing. These loans are perfect for business growth plans and other one-time business expenses.
However, you'll have to maintain a good credit score to make sure you get approved by alternative lenders. Although you might find lenders willing to invest in your vision solely, it’s a plus point if you have a solid credit score to back your plans.
Besides that, you'll have to show your annual income flux. This helps the lenders gauge whether you'll be able to return their money in the set period, or not.
Believe it or not, personal loans are far more flexible and affordable than traditional business loans, although they operate on a small scale.
Nevertheless, transparency is the key if you want to qualify for a personal loan. Create a trustworthy, dependable image in the market, and nothing can stop you from bagging that funding.
Here are a few well-known online portals you can approach for personal loans.
Quick Low Rate Personal Loans
Personal loans can be used for a variety of needs and should be available quickly at low interest rates.
Application is quick, easy, and free.
Upstart has one of the highest borrowing limits compared to any other online lending portal out there. If you're eligible, you can borrow up to $50,000 for your freelance business form this site. Just think of all the improvements you can make to your business with that kind of money.
While you need to have at least a 620 credit score to get a loan, the platform transacts money fast to get your work done right away. Also, the interest rate is market competitive so that you can create affordable installments for yourself.
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Lending Club is one of the first platforms to provide the option for personal lending online. Operating since 2006, the website has catered to almost 3 million aspiring businessmen like you in the past years.
We love this lending site because, the higher your credit score, the lower the interest rate for you. Their installment plans range anywhere from 3 to 5 years, and you'll receive your funds within a week after your loan is approved.
Crowdfunding is a trending funding option in all areas of investment nowadays. New business owners can source the funds they need from donors who find their business idea profitable.
You're probably thinking about what makes it different from personal loans. The main difference is that while personal loans are returnable, you don't have to repay the funds you receive from crowdfunding.
Wait, it's not free either. You have to give your donors the rights to your project and a percentage of your profits. However, to bag a decent crowdfunding amount, you have to work hard on your freelance business plan.
When you are new to credit, the credit card companies do not want to risk giving you an unsecured credit card, but they will offer you a secured credit card.
That's why crowdfunding is an excellent option for those who can work on their businesses full-time. But, for part-time workers who can't give much time to their business, crowdfunding can become challenging to manage.
Kickstarter is a user-friendly crowdfunding platform for you if you have a creative business idea. The best part about this platform is that it's all about you.
You can plan out your business and raise funds by providing rewards through your products, all by yourself. Similarly, you can map out your 60-day or 30-day funding plan. But, there's a catch. If you don't reach your target, you don't get the funds.
The platform also charges a percentage of your funding as their commission and a 3% fee for payment processing.
Once you start running your own freelance services business, you'll know that unpaid invoices can block out any further proceedings for you. If you can't pay your expenses, you won't have the money to take your business further.
Many freelancers give out their invoices to customers in return for their services or products.
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Invoice financing is not entirely dependable for a running business, as your payment terms might block your income and harm your business.
You can even go for invoice factoring, selling your invoices for a lower price for immediate cash payment.
For freelancers considering invoice financing, we recommend:
Fundbox offers prompt invoice financing and factoring services for freelance newbies like you. The website connects to your accounting software and uses the information to make its credit decisions.
If you qualify, you can receive up to 100% of your invoice payments. If you pay your balance before time, the platform waves off a percentage of their fee for you.
Lines of Credit
Lines of credit are one of the best loan options for freelance businesses.
We know what you're thinking.
You don't necessarily have to approach a bank for lines of credit; you can get it from online lenders as well.
For those of you who have not heard of it, a line of credit is similar to using a credit card. You'll be assigned a set amount of money by your lender.
Now, you can withdraw any amount you need within the limit whenever you want. This way, you only have to repay the money you used, with interest.
If you're interested in the line of credit, you can go for,
This is a flexible platform to get a line of credit of about $100,000 for your business. You can get access to the amount for either one or two years, depending on your terms.
Besides that, you can decide whether you want to repay the loan through weekly or monthly installments. It's easy to apply, and you can even qualify with a low credit score.
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That sums up our list for the loan options for freelance businesses. While no business owner can expect a smooth ride towards success, starting a business from scratch is an unmatched challenge for a freelancer.
Luckily, you can choose an option from this list that fits your needs, and start living your dreams today.
But remember, never make a credit decision based on instinct. Complete your due diligence for every platform before you sign up to avoid falling into a scam.
Also, make sure your business plan is formed correctly with a realistic payment schedule. It helps borrowing what's within your reach.
Good luck and happy freelancing!