Loan acceptance likelihood for freelancer?

jammyrobots

Hello, I'm new!

In May last year I was made redundant and I decided to finally make a go of my lifetime goal of being a full-time illustrator and designer. It's fair to say that I had less than two weeks notice and was self-employed very early on and so didn't have the recommended financial three-month cushion to fall back on.

Things started slowly and as a result, I relied on three credit cards and my overdraft to get by (I know, I know).

Now, I'm starting to pick up some momentum and I'm also looking for part time bar work to help out a bit.

My question is this:

If I applied for a loan of £10k with my bank (HSBC), repayable over five years, the monthly payments would be less than my credit card bills and at a substantially reduced APR. Of course, given my situation, I imagine I don't look all that stable.

Do you think there's a hope in hell that I'll be approved?

For clarification, one of my cards is also with HSBC. From my perspective, it's marginally more responsible than the way I acted throughout 2012, but the black and white... well.

Tixy

Very unlikely given the short time you have been self-employed.

Obviously you haven't been trading a year so haven't produced your first year end accounts yet but have your prepared some interim ones to see how much profit you are actually making?

Are both your business bank account and your personal bank account with HSBC?

How much of your current debt is with HSBC (on the card and presumably the overdraft)? They may be willing to convert those to a fixed repayment loan which you might want to consider, although you'd need to consider what APR they might offer you and how that would compare to the existing APRs on those 2 debts.

jammyrobots

Yeah, I figured!

I only have a personal account at the moment, as I attended an HMRC workshop and was told it wasn't necessary to have a business account. As far as profit goes, I haven't drawn up any interim accounts yet, but considering how quiet the first 3 months were, it shouldn't be too hard. The reality is that I'm living hand-to-mouth.

HSBC card and overdraft debt equals roughly 30% of my total debt.

InsideInsurance

Legally it is not required if you are a sole trader however most personal lines current accounts explicitly state you cannot use them for business. Worth checking you arent breaking the terms of your current arrangements with HSBC before asking them to get into another contract with them.

A sole trader for only a couple of months is going to massively struggle to get anything even at a high APR unless you've had a very long and successful relationship with the bank and even then you'll struggle.

iolanthe07

Have you any collateral you could offer the bank?