Business loans · Self-employed
Business Loans for the Self-Employed, Sole Proprietors and 1099 Contractors: What You Can Get and How
Self-employed owners, sole proprietors and 1099 contractors run about 80% of American businesses and get turned down more than anyone else, usually for reasons that have nothing to do with their ability to repay: no separate business bank account, income that looks small after deductions, no entity, or a lender that simply does not fund sole proprietorships. This guide covers which products actually fund the self-employed in October 2026, what they cost with Prime at 7.00%, the documents that replace a W-2, and the fixes that turn a decline into an approval.
Can a Self-Employed Person Get a Business Loan?
Yes. A self-employed owner with six or more months of deposits into a business bank account, $10,000 or more a month in deposits and personal credit from about 500 qualifies for revenue-based financing; from 600 to 625 for an online line of credit or term loan; and from 680 with two years of Schedule C returns for a bank or SBA loan. The two things that matter most are a separate business account (lenders size the loan on its deposits, not on your tax return) and consistent deposits. Amounts run one to one and a half times monthly deposits online and up to $5 million at banks and SBA lenders. The obstacles are specific: some online line lenders exclude sole proprietors, Schedule C income after deductions can look too small for a bank, and 1099 contractors with one client are treated as a concentration risk. Forming an LLC does not change the credit decision, but it opens a few lenders that will not fund sole proprietors.
Business Loans That Fund the Self-Employed
| Product | Funds sole proprietors? | Amounts | Cost at Prime 7.00% | Minimums | Documents |
|---|---|---|---|---|---|
| Revenue-based financing | Yes | $10K – $500K | Factor 1.15 – 1.45 | 6 mo, 500+, $10K/mo deposits | 3 months of business statements |
| Merchant cash advance | Yes (card sales) | $10K – $250K | Factor 1.15 – 1.50 | 6 mo, 500+, card volume | Statements plus processing statements |
| Online term loan | Most lenders | $20K – $250K | 10% – 36% APR | 1 yr, 600+, $15K/mo | Statements; returns above ~$150K |
| Online line of credit | Some lenders (Idea Financial excludes) | $10K – $150K | 8% – 36% APR equiv. | 6 – 12 mo, 600+, $15K/mo | Statements |
| Equipment financing | Yes | $10K – $500K | 9.9% – 24% | 1 yr, 600+ | Quote plus application |
| Invoice factoring | Yes (B2B invoices) | $20K – $2M | 1% – 4% per 30 days | Creditworthy customers | Invoices and aging |
| Bank term loan or line | Yes, with returns | $25K – $1M | 7% – 11% | 2 yrs, 680+ | 2 years of Schedule C, P&L, statements |
| SBA 7(a) | Yes | $50K – $5M | 10.00% – 13.50% | 2 yrs, 680+ | Full package, Schedule C |
Products that rely on bank deposits rather than tax returns (the first four rows) are where most self-employed approvals happen; see bank statement business loans.
Why the Self-Employed Get Declined, and the Fix for Each
| Reason for decline | What the lender sees | Fix |
|---|---|---|
| No business bank account | Deposits mixed with personal spending; cannot size the loan | Open a business account now; six months of deposits qualifies for most online products |
| Schedule C shows low profit | Net income after deductions under what the payment needs | Apply to deposit-based lenders; banks will add back depreciation and some deductions if you ask |
| One client (1099 contractor) | Concentration risk | Show the contract and payment history; factor the invoices instead |
| No entity | Some online line lenders exclude sole proprietors | Apply to lenders that accept them, or form an LLC (one day in most states) before applying |
| Irregular deposits | Cannot predict repayment | Apply after three steady months; ask for one times monthly deposits, not two |
| Personal credit under 600 | Most lines and term loans decline | Revenue-based financing from 500; equipment financing with a down payment |
Share of applicants fully approved, by product (Federal Reserve, 2026)
81% of applicants were approved for at least part of the request. Source: Federal Reserve Banks, 2026 Report on Employer Firms.
Documents That Replace a W-2
- Three to six months of business bank statements (every page); this is the whole file for revenue-based products and online lines.
- Schedule C from the last one or two returns for banks, SBA lenders and larger online loans; bring the full 1040.
- 1099s and client contracts for contractors, to show income continuity.
- A year-to-date profit and loss, even a simple one from your accounting software.
- Business license, DBA filing or LLC articles, plus your EIN letter (a sole proprietor can get an EIN free from the IRS in minutes, which also keeps your SSN off applications).
- Driver’s license and a voided business check.
The complete list by product is in what documents do I need for a business loan.
What Self-Employed Business Loans Cost
| $40,000 borrowed | Pricing | Term | Total cost |
|---|---|---|---|
| Bank term loan (2 years of returns, 680+) | 9% | 24 months | $3,850 |
| Online term loan | 22% APR | 12 months | $4,950 |
| Online line, one draw | 2.5% per draw | 12 months | $1,000 |
| Revenue-based financing | Factor 1.25 | 9 months | $10,000 |
| Merchant cash advance | Factor 1.35 | 6 months | $14,000 |
Total cost of $40,000, by product
Deposit-based products approve more self-employed files and cost two to four times more; graduate to a line or term loan as the file matures.
Convert any offer with the factor rate calculator.
How to Get a Business Loan When You Are Self-Employed
- Separate the money. A business account with six months of deposits is the single biggest step; route every client payment through it.
- Get an EIN (free, irs.gov) and a DBA or LLC so applications carry a business identity.
- Pull your personal credit and fix errors; 600 opens lines and term loans, 680 opens banks.
- Apply through RAN Funding with three months of statements to see deposit-based, line, term, equipment and factoring offers on one soft pull.
- Take the cheapest product that funds in time, pay it on schedule and reapply at six months for better pricing and a larger amount.
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Common Questions
Can a sole proprietor get a business loan?
Yes. Sole proprietors qualify for revenue-based financing, merchant cash advances, most online term loans, equipment financing, invoice factoring, bank loans and SBA loans on the same terms as entities, provided they have a business bank account and the required deposits, credit and time in business. A few online line-of-credit lenders exclude sole proprietors; a broker routes around them.
Can I get a business loan as a 1099 contractor?
Yes, if contractor income is deposited into a business account for six or more months at $10,000 or more a month. Lenders may discount income from a single client; providing the contract and payment history helps, and invoice factoring is an option for B2B contractors with slow-paying clients.
Do I need an LLC to get a business loan?
No. Lenders fund sole proprietorships. An LLC helps in two ways: a few online lenders accept only entities, and an EIN keeps your Social Security number off applications. It does not change the credit decision, which rests on deposits, time in business and personal credit.
How much can a self-employed person borrow?
Online products size at one to one and a half times average monthly business deposits ($10,000 to $500,000 for most self-employed files). Banks and SBA lenders lend what two years of Schedule C income can service, up to $5 million, often adding back depreciation and certain deductions.
Can I get a business loan with just bank statements if I am self-employed?
Yes. Revenue-based financing, merchant cash advances, online lines and most online term loans up to about $150,000 are underwritten on three months of business bank statements with no tax returns. See bank statement business loans.
Is RAN Funding a lender?
No. RAN Funding is a business financing broker. We present your application to our lender network and show you the offers you qualify for; the funding partner sets the approval, amount, rate, fees and terms.
Sources
- 2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey — Federal Reserve Banks
- H.15 Selected Interest Rates (bank prime loan rate 7.00%) — Board of Governors of the Federal Reserve System
- Best business loans for the self-employed and sole proprietors — NerdWallet
- Apply for an Employer Identification Number (EIN) online — Internal Revenue Service
See What You Qualify For
One application, about five minutes, soft pull only. A funding specialist tells you up front which products fit your file, what they cost and how fast each one funds.
More on Qualifying for Funding