Many people who wish to apply for a loan are not in the comparatively comfortable position of many non-self-employed workers who are at least partially covered by the unemployment benefit I if their employer goes bankrupt or job cuts go on for up to 12 months.
Many self-employed and freelancers who do not contribute to unemployment insurance are therefore asking themselves: Can I get a loan without unemployment insurance and how do the banks handle it if the income from their own business is one of the main sources of income? Therefore, some may wonder why uninsured loans are commonplace today and that many more borrowers than the self-employed can use this loan. The best way to approach the topic is to take a closer look at the unemployment insurance scheme. And then assess how their payments could affect the credit rating or the repayment probability.
Unemployment insurance is an additional credit rating
For the bank, the payment to unemployment insurance means, with a few exceptions, all non-self-employed persons a change in current and future possible cash flows. The net salary drops by a low, single-digit percentage and the employer makes his own contribution to the unemployment insurance. But the consequences of a termination are significantly mitigated: After the considerable reduction of protection against dismissal, the employees without unemployment insurance would only stand with a basic security whose income is not attachable.
Therefore, if there is a proof of salary and income and the additional contractual assurance that no notice has been given, the banks assume that the employment relationship will continue! The Unemployment Insurance Loan thus starts from the existing monthly positive revenue surplus and continues to write this revenue into the future. For maturities up to 24 or 36 months, this approach is relatively uncritical and there is little likelihood of non-repayment.
In the case of loans without unemployment insurance, industry affiliation also counts
The situation is different with self-employed and freelancers of all kinds. Here, either the tax assessment of the previous year, the current “credit” on the company account or a checking account and any existing business evaluations are used to assess what the monthly revenue surplus looks like. The problem here is particularly for companies with few employees: If the founder of the company for a long period of sick or loses the company too many customers, the repayment may be in danger.
Then, however, there are no benefits from a payment of unemployment insurance available, because previously no payments were made. Therefore, the bank has to calculate the repayment probability and the term of consumer loans for all self-employed persons according to a different pattern.
Over time, the bank learns from many completed and most fully repaid loans which factors could be crucial. This is also the reason that new credit providers usually start with loans for employees and employees. The more complex products – such as the loan without unemployment insurance – are then later added to the product range.