While Singapore has high median household income compared to other Asian countries, the income gap between the individuals is also higher. As per the Department of Statistics, the median monthly income of households headed by a permanent resident is $9,293 and $2,792 per household member at the end of December 2018. However, income inequality is widening as the income of the 10 percent richest household members increased from $8,571 in 2007 to $13,215 in 2017. This is in contrast to the income growth of $219 among the 10% poorest households during the same period. This suggests that the income gap between the highest and lowest earners grew by 54% in 2017. From this data, it is evident that borrower has to be on the higher income earning group for taking a loan from financial institutions.

According to the latest survey report of the government, there are 223,500 self-employed residents, which is 8.4% of the country’s resident workforce. While many individuals choose self-employment because it suits their lifestyle, but it also makes it harder to get a personal loan for self-employed approved.

Let’s take a look at certain key aspects that have to be considered by self-employed individuals while applying for a loan:

Eligibility for taking personal loans

As per the present norms, the criteria for availing loans by self-employed are more stringent as they have to provide NRIC copy along with last 2 years’ Income Tax Notice of Assessment and bank statements of three preceding months. Also, credit facilities can only be availed if self-employed individuals earn more than $2500 a month ($30,000 a year).

Loan from a Licensed Moneylender

As per the Ministry of Law, there are 157 licensed money lenders operating in Singapore and they provide different types of loans. Licensed moneylenders are preferred over banks since they have flexible loan policies and provide quick services and they are governed by the rules and regulations enacted by the Ministry of Law. Recently, the government canceled the licenses of three money lenders for misleading the people through advertisements. Hence, the rights of the borrowers are safeguarded and moneylenders are penalized in case of misconduct.

Adding Co-borrower

The self-employed individuals can increase the strength of their loan applications by including co-borrower, applied that the co-borrower satisfies the income criteria. However, it is advisable to check the credit score of each applicant since moneylenders check the credit during the fast cash loan approval process in Singapore.

Credit Co-operatives

Credit co-operatives are the financial institutions that are created, owned, and operated by its members, who pool their resources for helping one another. As of 31 March 2018, there are 83 co-operatives operating in Singapore out of which 56 are Consumer and Services Co-operatives, 24 Credit Co-operatives, and 3 School Co-operatives. They are not-for-profit organizations and provide financial assistance at lower interest rates without expecting any profits. For example, Straits Times Co-operative (Credit co-operative) offers loan to their members at just 6 percent interest per annum.

These are a few ways in which self-employed individuals can get their loans approved and meet all their exigencies without facing any difficulties.