For Self-Employed Singaporeans, Personal Loans are Tougher to Get

Ryan Ong

Ryan Ong

Last updated 15 September, 2016

To ensure you don't lose access to extra funds, understand how to get a personal loan before becoming self-employed in Singapore.

If you are self-employed, or about to be, you should take note that
personal loans in Singapore may be less accessible. The same rules that apply to employees don’t apply to entrepreneurs or freelancers.

To ensure you don’t lose access to funds when you launch your startup or become a solo artist, be sure to understand all unsecured loan requirements. These tips will help you get a personal loan if you're self-employed:

Table of contents

Your CPF statements may not suffice

There is a common misconception that banks figure your salary based on your CPF contributions. Banks verify the claims of regular employees by looking at their CPF statements, and they can see when additional voluntary contributions are made.

If you are self-employed and need a personal loan, you will usually not be asked for CPF documents. So even if you make voluntary CPF contributions, these may not help.

Instead, you will be asked for your income tax Notice of Assessment, for a period of two years. (This may differ slightly between different institutions.) If you are a salesperson working on a commissioned basis, you will also be asked to provide a statement on your commissions for the past six months.

This means you cannot raise your credit ceiling by voluntarily stuffing large amounts in your CPF. So please don’t start voluntarily paying S$3,000 a month into your CPF, because you think this “fools” the bank into believing your monthly income is $8,300+.

Although you may want to do that for savings and investment, which is a different topic altogether. We’ve recently written about the pros and cons of keeping your money in your Special Account.

See also: Your Go-To Personal Loans Guide in Singapore

Singsaver Exclusive Offer: Receive the following rewards when you apply for an SCB CashOne Personal Loan:

New Customers: Receive an Apple iPhone 15 128GB (worth S$1,311) or a Dyson Purifier Cool Air Purifier TP07 (worth S$909) or an Apple iPad 10th Gen 10.9 64 GB (worth S$691.60) or a Dyson V8 Slim Fluffy (worth S$509) or a Nintendo Switch Gen 2 (worth S$399) or up to S$1,040 Cash upon loan approval when you apply for a minimum loan of S$8,000. Valid till 30 June 2024.  T&Cs apply.

Existing Customers: Receive up to S$520 Cash via PayNow upon loan approval when you apply for a minimum loan of S$8,000 with a tenure of 3 to 5 years. Valid till 30 June 2024. T&Cs apply.

Plus, enjoy up to S$4,100 cashback when you apply for a min. loan of S$12,000 with a tenure of 3 to 5 years. Valid till 31 May 2024. T&Cs apply.

Secure a line of credit while you're employed

As a freelancer or entrepreneur, you need to present your Notice of Assessment for two years. If you have been self-employed for less than a year, this is obviously a problem.

As such, new startup owners or self-employed people need to secure a line of credit like DBS Cashline before quitting your job. A line of credit, or credit card, is usually valid for at least two years. This covers the amount of time needed before your Notices of Assessment qualify you for another loan.

Note that there are many advantages to having a valid credit card or credit line for the newly self-employed. For example, if you are just starting up your career as a freelance photographer, you can save significantly by charging your initial equipment costs to a cashback credit card.

Get access to these facilities before you take the plunge. When it comes to credit, it’s better to have it and not need it. 

Your income may count as being lower

For some types of loan, self-employed persons have a 30 per cent “haircut” when factoring their income. So if your income is S$5,000 a month, the bank may count it as being S$3,500.

This is a common gripe among mortgages and car loans, where it can drastically lower the loan quantum (the amount that can be borrowed). Note that in some cases, it can also lower the credit ceiling on a personal loan, or make it harder to qualify.

A credit line that requires a minimum income of S$40,000 per annum to qualify may, in your case, require S$50,000 per annum.

We’d love to tell you there’s a way around this, but there isn’t. The only way around it is to own a thriving business with significant assets, or get rich. Once you have a million dollars, fewer banks will doubt your ability to pay them back.


⚡Flash Deal⚡: Be one of the first two daily at 12pm to apply for an HSBC Personal Loan with at least a minimum loan amount of S$20,000 and SingSaver will cover your 1st year’s interest (up to S$400) on top of existing rewards. Remaining approved applicants will enjoy SingSaver’s Exclusive Offer. Valid till 31 May 2024. T&Cs apply.

SingSaver Exclusive Promotion: Enjoy the following rewards when you sign up for an HSBC Personal Loan:

Receive an Apple iPhone 15 Pro 256GB (worth S$1,825.75) or an Apple Macbook Air 256GB 13 inch (M2 chip) (worth $1,613.80) or an Apple Bundle (worth S$$1057.60) [Apple iPad 10th Gen 64GB (worth S$691.60) + Apple AirPods Pro Gen 2 (worth S$365.70)] or a Dyson AirWrap 2.0(worth $859) or Dyson V8 Slim Fluffy (worth $509) or S$700 eCapita Vouchers when you get approved for a loan of min. S$10,000 with tenure of 3 to 5 years. Valid till 30 June 2024. T&Cs apply.

Going full-time for a month won’t cut it

You need to be employed for three months as an employee before the bank will take that CPF statement as evidence of your income.

So to answer a common question: no, you cannot work a part-time job for a month to get a loan, and then go back to being self-employed.

Your credit score matters more than ever

You may find loans harder to qualify for as a self-employed person, so keep a high credit score at all times. If you default on your loans or fail to repay them on time, access to bank loans can quickly go from difficult to impossible. Stick to loans that you know you can service, and always pay credit cards in full and on time.

Checking your credit score at Credit Bureau Singapore normally costs S$6. But from now until 31 December 2016, and Credit Bureau Singapore is giving you free access to your credit report! Get started by signing up for your credit report voucher today.


✨#UnlockYourDreams Promo✨: Apply for a CIMB Personal Loan and fulfil the specific eligibility requirements for a chance to win a Hustler Hannah Starter Pack (worth S$5,307.95) or a Reno Ryan Starter Pack (worth S$5,641.40) or a WanderLust Wendy Travel Starter Pack (worth S$5,668.60) on top of our existing rewards. Valid till 13 June 2024, 11.59pm. T&Cs apply.


SingSaver Exclusive Offer: Receive a Macbook Air 256 GB 13 Inch M2 Chip (worth S$1,613.80) or a Dyson V12s Detect Slim Submarine™ Complete (worth S$1,449) or a PlayStation 5 (Disc Version) (worth S$799) or a Dyson AM07 Tower Fan (worth S$459) or up to S$1,200 Cash when you get approved for a CIMB Personal Loan with a min. loan amount of S$8,000 and tenure of 3 to 5 years. Applicable to new customers only. Valid till 31 May 2024. T&Cs apply.


Ryan has been writing about finance for the last 10 years. He also has his fingers in a lot of other pies, having written for publications such as Men’s Health, Her World, Esquire, and Yahoo! Finance.


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