What Are Personal Loans for Freelancers? How to Get a Personal Loan As a Freelancer In India

Freelancers more often than not make more money than their salaried counterparts in a similar role. However, this fact doesn't always help when freelancers apply for personal loans.

With most financial institutions, the process starts and ends when the discussion of salary slips comes up. Why? Cause the system expects it. But personal loans for freelancers do exist. You just need to know where to look and have a few select supporting documents for your application.

What Are Personal Loans for Freelancers?

Personal loans for freelancers are just another personal loan. The only difference is the process used to vet if a freelancer is eligible for one or not.

Traditional banks focus on the "salary component" when evaluating an applicant's eligibility for a loan. The moment they see that there is no "fixed" income coming in, they view a freelancer as a risk.

In their eyes, a person earning a steady 50k a month is less of a risk than a person earning, say, 90k one month, 50k the next, and 70k the month after that. The fact that the freelancer has earned more overall doesn't matter.

Considering that the number of freelancers in India is well over the 15 million mark, this is a market too large to ignore. Thankfully for you, NBFCs like Hero FinCorp now offer freelance-friendly loans and evaluate you based on how much you earn overall and your spending patterns.

What Are the Documents Required When Applying for a Personal Loan As a Freelancer?

As a freelancer, you may be asked to produce any of the following documents when applying for a personal loan. That said, not every lender will ask for everything. This is a generic list.

• PAN, Aadhaar
• Address proof
• 6–12 months bank statement
• IT returns/Form 26AS
• Freelance invoices
• Contracts or work orders
• Income declaration letter
• GST certificate (optional)

Pro Tip -Separate your income and expense accounts. This will make it easier to evaluate your bank statements and could work in your favour.

How to Apply for a Personal Loan As a Freelancer?

The process to apply for a personal loan for a freelancer is almost the same as that for a salaried employee.

1. Verify if you check the following boxes:

• Age between 21 and 58 years
• Bring in at least ₹15,000 per month with your freelance work and have been doing this consistently for at least 2 years
• Have a credit score of at least 750 or above.

2. Make sure you have all the documents from the above list ready.

3. Apply for your loan online.The process is digital, so you can scan and upload all the required documents. Complete the KYC and OTP verification and finish your application.

The lenders will now verify all the information you have provided, and if satisfied, will sanction the loan and credit the required amount to your bank account.

How Can You Improve Your Chances of Getting a Personal Loan As a Freelancer?

There are several steps you can take as a freelancer to improve the chances of getting your loan application approved.

• Try to maintain a credit score of 700 and above to improve your chances of loan approval. You will also be eligible for higher amounts. Anything below 700 will reduce your chances of getting the loan approved. Even if one does get approved, the amounts will be much smaller and at higher interest rates.
• Make sure you file your ITRs every year, even if you don't meet the tax threshold. It tells lenders that you are diligent with your finances.
• Try to clear off your existing debts before you apply for a loan. When lenders see that you are already leveraged to a significant amount, they will reject your application.
• If you are a first-time borrower with no credit history. Start with a small loan, pay the EMIs on time to build a good credit history. It will open doors to larger amounts when you really need them.

Get Your Personal Loan As a Freelancer From HeroFincorp

Getting a personal loan as a freelancer is no longer an uphill battle. The market is changing, and as time goes by, so will the number of options available to you. After all, an income is an income, no matter if it comes in the form of a salary or via a freelance gig.

HeroFincorp is one such lender that welcomes freelancers when it comes to personal loans. The process is easy, transparent, and fully digital. What's more, you can get the funds in your account within 24 to 48 hours.

Your freelance income deserves equally flexible credit. Apply for a Hero FinCorp personal loan today and get quick approvals!

Frequently Asked Questions

What is the average loan amount freelancers receive?

On average, freelancers can expect a personal loan of between ₹1-₹2 lakhs as first-time applicants. With higher income streams along with documents to prove it, this limit can go up to ₹5 lakhs.

Are personal loans for freelancers secured or unsecured?

Personal loans, no matter who they are disbursed to, are unsecured loans.

What is the approval and disbursal timeline when it comes to personal loans for freelancers?

Hero FinCorp usually verifies and approves a loan application for a freelancer within 24-48 hours if the applicant meets the criteria. Once approved, the loan amount is generally disbursed the same day.

Can freelancers with low credit scores get a loan?

Yes, but anything below 700 will restrict the amount and will be offered at higher interest rates.

What alternative income proofs are accepted?

Anything that shows consistent money coming to your account can be considered income as a freelancer. This can range from your invoices, work contracts, to GST returns.

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