All You Need to Know When Considering a Loan for Gig Workers

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A L L Y O U N E E D T O K N O W W H E N
C O N S I D E R I N G A L O A N F O R G I G W O
R K E R S
B Y L E V E L F I N A N C I N G
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(No Transcript)
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A L L Y O U N E E D T O K N O W W H E N
C O N S I D E R I N G A L O A N F O R G I G W O R
K E R S
The pandemic has given an additional push to the
growth of the so-called gig economy. This term
refers to independent work offered by both
businesses and individuals through various
digital platforms. As the number of gig workers
increases, so does their general demand for loans
and financing. In the gig economy, workers can
find clients who offer them freelance work and
one-time tasks. Gig workers can choose the amount
of work flexibly and sell their services to
multiple clients. Some of these independent
workers use gigs as their primary source of
income, while others see it as a way to
supplement their existing salary.
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Here are some examples of gig work. Food
delivery Apps like Instacart, DoorDash,
Grubhub, and Uber Eats allow restaurants and
fast food businesses to hire independent workers
for deliveries. The hourly pay usually ranges
between 12 and 22. Ridesharing Car owners
can use apps like Uber, Lyft, and Gett to offer
services to people who need transportation. On
Uber, riders earn between 8.55/hour and
11.77/hour on average, according to
ridester.com. Cleaning You can find cleaning
gigs on several platforms, including
Housekeeper.com, which specifically targets
workers in this field. According to ZipRecruiter,
cleaners in the US earn 13.87 per hour on
average.
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Freelancing On several freelancer platforms,
like Fiverr and Upwork, professionals in fields
as diverse as coding, web design, translation,
photography, and digital marketing, can find
clients who offer both short-term and long-term
work opportunities. The pay varies significantly
based on each workers field, experience, and
qualifications. Micro-tasking Other platforms,
like Amazon Mechanical Turk, Prolific, and UHRS,
allow requesters to find flexible workers who are
willing to complete short tasks known as HITs
(from surveys to transcriptions to recordings to
data entry). Each task is offered in a bundle,
and each worker can choose how many HITs from
each bundle to work on. Short-time rentals
Those who are willing to rent their house (or
parts of it) to tourists and other short-term
stayers can do so on platforms like Airbnb,
VRBO, and Couchsurfing. For many people, this has
become the main source of income.
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T H E G I G E C O N O M Y A Q U I C K O V E R V
I E W
Here are some interesting statistics on the
increasingly relevant role of the gig
economy. According to a study commissioned by
UpWork and Freelancers Union, 35 of the US
workforce admitted to freelance in 2019, while
28 are full-time freelancers Gig workers
contribution to the US economy amounted to 5.7
of GDP in 2020 (Source Zippia) The gross volume
of the worlds gig economy amounted to 401.4
trillion dollars in 2022 (Source World Economic
Forum) In 2023, the value of the global gig
economy is expected to be 455.2 trillion dollars
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I S T A K I N G O U T A L O A N H A R D E R F O
R G I G W O R K E R S ?
The general tendency among banks and other
financial institutions is to associate gig
workers with high financial risk. This is due to
numerous factors.

• Gig workers have a less predictable income than
  traditional employees. They dont get paid for
  their time off.
• No employer is offering them a benefits package,
  and they have to find insurance by themselves.
• Many gig workers constantly need to look for new
  clients. Their clients may pay late and, in some
  cases, not pay at all.
• As sole proprietors, they are liable for all
  debts and losses incurred by
• their business.

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C R E D I T C A R D S F O R G I G W O R K E R S A
N D F R E E L A N C E R S
As a gig worker or freelancer, you are legally
running a small business. This applies even if
you dont have any employees, dont have a
separate business address, and dont plan to
expand your business in the future. Having this
status alone increases the chances of obtaining
credit cards aimed at small business
owners. Focus your search on business credit
cards with low fees and attractive rewards
programs for a wide range of business costs.
Applying for cards with high fees and high
spending requirements is not advisable when your
income as a gig worker is not significant.
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Here are ways to improve your chances of
obtaining a mortgage. Apply for a mortgage when
you have worked for at least two years as a gig
worker. Alternatively, apply after working for at
least one year as a gig worker and for the
previous year as a regular employee. Provide 1099
forms and tax returns. Provide bank statements
showing a regular (or even better, increasing)
inbound cash flow. Maintain a high FICO credit
score and a low debt-to-income ratio. If you
perform very well under these criteria, lenders
are more inclined to overlook that you dont
have a traditional employment contract. Make a
large downpayment. Try to accumulate enough
savings before applying and provide proof of
your savings during the application.
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