Your employment status is a huge contributory factor in whether or not you are accepted for any form of credit. Arguably this is even more important within the payday loan field, where the salary is used to guarantee the amount being borrowed. Therefore, if you can't demonstrate your earning potential, rejection is often assured.
Unfortunately, this is often the case for many self-employed workers. Due to the variable nature of your income when you're reliant on clients and temporary contracts, no two months are the same. So whilst you may actually earn more than enough to meet the requirements of a payday loan lender (this is often around £750 per month), this wage cannot be guaranteed.
This can make it difficult to borrow from any source, although you should still be able to approach your bank and explain the situation in more depth. As payday loan companies and other short-term lenders need to be able to recoup the money within a matter of weeks, they are far less interest in your financial history. Instead they are far more concerned about the here and now. This is why they allow people with decent salaries and poor credit ratings to get access to funds, where most lenders certainly wouldn't.
There are exceptions to every rule of course, so you may be able to find a payday loan company who is able to provide the funds you need. However, due to the risks and factors mentioned above, these are few and far between. If you can demonstrate your earnings over a longer period and have evidence of future employment - including contracts and other agreements - self-employed workers would often be advised to approach banks in person and discuss the situation.
As previously mentioned, the fact that payday loan companies often can't accept self-employed individuals is not a slight on them or this kind of work, it is simply an assessment of risk. No lender wants to provide cash to people who are likely to default when it comes to repayment. Whilst having your own company or working on a contractual basis doesn't make you any more likely to run off with the money, it does make it much more difficult for the lender to guarantee your salary.
Without this kind of reassurance, most companies will reject applications automatically. Whilst this can be irritating, it can also save you a great deal of financial grief. As payments to contractors and the self-employed are often a little more sporadic (i.e. you'll have encountered a number of situations where you haven't been paid on time for work completed, sometimes not even at all), the last thing you want is to have more debt to worry about.
If you were to take a loan and then find yourself in a position where you couldn't repay it as agreed, an extra month's interest would be applied to the total amount along with a charge. This can be hugely damaging and could have a negative impact on your financial status for months.
