You are a freelance artist in desperate need of fresh capital, but you have often heard and read that artists generally have a hard time getting a fair loan? Admittedly, freelancers and artists are not among the most popular target groups of german banks and commercial credit institutions, as their respective income relationships can often be classified as irregular and unsecured. However, the fact that artists have virtually no chance of obtaining a fast, flexible, and inexpensive loan for artists is a fairy tale!
In this article, the team of KREDIT 123 discusses the topic "credit for artists" and gives important tips and hints on how you can get urgently needed money as an artist even despite a precarious income situation and without SCHUFA.
There are interesting ways and means for freelancers to take out a favorable loan! So don't hang your head just because the first attempts didn't work out! With our tips, you may still be able to get a fair loan for artists!
Credit for artists from german banks and commercial credit institutions
If an artist wants to take out a loan, he often first turns to his bank. Before doing so, however, you should be aware of the basic requirements that must be met in order to apply for an artist loan, and how german banks and credit institutions generally check an applicant's creditworthiness and credit standing.
Requirements for applying for a loan for artists
- Age of majority and full legal capacity
- Official residence in the federal republic of germany
- Current account with a german bank
- Various proofs of income situation
- Creditworthiness and credit standing
If an artist seeking credit can meet these requirements, he or she should look at the main criteria that german banks and commercial credit institutions use to check the creditworthiness of an applicant.
Verification of the income of the applicant artist
First of all, it is necessary to check the applicant's income. The bank will examine a wide range of documents in order to obtain a very precise picture of the income situation of the artist seeking credit. With freelance artists, however, it is often the case that no regular income can be proven. And this german banks and credit institutions do not see particularly gladly!
Check the SCHUFA entries of the applicant artist
The second important criterion that is checked by german banks when assessing creditworthiness is the applicant's SCHUFA score. The SCHUFA score is composed of the entries that are deposited for a person at the german credit agency SCHUFA.
If the corresponding value is very low or even negative, the creditworthiness of the artist seeking credit is to be classified as poor. If, on the other hand, the value is high, it indicates a high creditworthiness.
Once a year, artists can request a free SCHUFA report in order to check their respective data and, if necessary, to obtain a new credit rating. To be able to have outdated or incorrect entries deleted. Credit seekers should make use of this option. Because the better and cleaner the SCHUFA data is, the higher are the chances to get a flexible and cheap credit for artists.
Checking personal and material credit securities
A very important criterion that is examined in the credit assessment and must not be forgotten is the possibility of providing personal and/or tangible loan collateral. Because if these collateral can be provided to effectively secure a loan, you increase your chances immensely to get a fast and cheap loan for artists.
Personal loan collateral to secure a loan for artists
Personal loan collateral includes the inclusion of another borrower as well as the entry of a surety bond. While in the first type of personal security, a co-applicant is directly involved in the conclusion of the contract and is therefore liable for the repayment of the monthly installments in the same way as the main applicant, in the second variant, the registered guarantor is only liable if the borrower is no longer able to repay his loan. The guarantor is therefore a third party who only has to step in when the borrower is insolvent.
As a rule, guarantees can also be registered subject to reservation. This means that the guarantor really only has to pay when all conceivable foreclosure measures have actually already been applied and the borrower in question really no longer has any assets at his disposal. Possibly an argument to convince a still doubtful guarantor to sign after all!?
Material loan collateral to secure a loan for artists
The tangible loan collateral, also known as real loan collateral in technical jargon, includes the mortgage, the land charge or the pledging of larger assets to secure the loan in part or in full. With a mortgage, the lending bank is granted a lien on a house or piece of land that can be enforced if the loan is no longer repaid. Jewelry, watches, cars, stocks or securities can also serve as tangible collateral for a loan.
Since collateral can be a strong factor in persuading a still doubtful bank to quickly approve a loan for artists, artists seeking a loan should definitely know what collateral options they have in the first place BEFORE they enter into loan negotiations with the (house) bank. The more convincing you can appear at the credit interview and the more aces you have up your sleeve, the more likely you are to receive a flexible and favorable loan for artists!
Credit for artists without SCHUFA from foreign banks
If you simply do not succeed in obtaining a loan from a german bank as an artist, you naturally have the possibility to try it abroad. Especially in switzerland or liechtenstein, there are credit institutions and banks that grant loans for artists and freelancers even when german banks say "no" across the board. Especially if the SCHUFA value is bad, but the income situation can be classified as regular, it is very worth considering applying for a loan for artists without SCHUFA abroad.
Swiss and liechtenstein banks use different methods to check the creditworthiness of an applicant. The query of the SCHUFA data does not belong here, however, since foreign credit institutions are not contractual partners of the german credit agency SCHUFA. For this reason, the approval of loans without SCHUFA is possible in foreign countries, while the same is almost impossible in germany.
A loan without SCHUFA, which is often called a swiss loan because it is issued in switzerland, does not only mean that no SCHUFA check is carried out during the credit assessment procedure. It also does not result in a SCHUFA entry. Even civil servants or permanent employees with a high regular income apply for loans without SCHUFA for the reason that they do not want to "mess up" their SCHUFA score with a consumer loan. This could have a negative impact on the conditions and interest rates of a planned construction financing.
Provision of loan collateral for loans for freelancers without SCHUFA
In order to obtain more favorable interest rates and better conditions, artists and freelancers can, of course, also provide personal or material collateral to secure a loan without SCHUFA. Regardless of where the loan is applied for, borrowers should always check whether they can obtain a more flexible and favorable loan through collateralization!
Payment of upfront costs by dubious credit brokers
Since the demand for SCHUFA-free loans for artists and freelancers is not exactly low, dubious credit brokers and black sheep have unfortunately also spread in this segment, who demand completely unabashedly upfront costs, even if the respective credit applications are not even approved. For this reason, foreign loans without SCHUFA are to be cautious of the preliminary costs and fees to be paid!
Credit for artists from private sources
Furthermore, there is the option to borrow money as an artist from private lenders. Before digitalization, private lenders were mainly lenders from one's own family or close circle of acquaintances. Today you can also find numerous unknown private lenders on special internet sites, who of course also grant loans to artists or freelancers.
Credit for artists from family members or acquaintances
The freelance artist who has wealthy relatives or acquaintances who grant him a low-interest loan for artists is very lucky. Often it is even possible to obtain an interest-free loan because family members or acquaintances simply want to support you as best they can.
In the case of the interest-free loan, however, it is important to ensure that tax traps can be excluded. Because if a transaction takes place that is above the tax-free amount for gifts, the same could in principle first be assessed by the tax office as a taxable gift! And that would be anything but pleasant!
Credit for artists from unknown private lenders
Rather, the last straw for artists is the private loan, which is issued by unknown private lenders. For this usually has relatively high interest rates, which should be understandable, however, since the corresponding lenders also have a relatively high default risk. And risks in lending almost always inevitably lead to higher annual effective interest rates.
Read all conditions thoroughly!
Since private lenders also include those who are not so reputable and thus belong to the so-called loan sharks, artists should keep a watchful eye on the conditions and clauses in the loan agreement when taking out a loan from a private lender. Because here the devil is often in the details.
Due to the high degree of customizability that is possible when granting loans for artists from private sources, special repayment options and cancellation rights, for example, can simply be deleted from the loan agreement. Also other consumer protection rights fall with unseriosern offerers not rarely simply under the table. Caution is advised here!
Think of the brokerage fees payable to online portals!
When it comes to loans for artists from private sources, it is often overlooked that the use of online portals, which bring borrowers and private lenders together, results in brokerage fees in the event of success. These then of course increase the effective annual interest rate of the usually already expensive loan for artists. Here, too, caution and a thorough examination are advisable!
Kfw loan for freelance artists, freelancers and business founders
An extremely interesting possibility to be able to take out a loan as an artist is to apply for a kfw loan or a kfw start-up loan. The german reconstruction loan corporation (deutsche kreditanstalt fur wiederaufbau – kfw) has a number of very attractive programs for artists, freelancers and start-ups. The kfw has dedicated itself to the task of helping self-employed and freelance people get on their feet with grants, support programs and loans. So be sure to check here! You may be able to obtain a fair loan for artists with extremely favorable conditions through the kfw!
Uses of loans for artists
If the loan for artists is a freely available consumer loan, it can be used for a wide variety of purposes and objects of purchase. However, if it is earmarked, it can only be used for the purpose described in the contract.
For example, a car loan for artists can only be used for the purchase of a car, a modernization loan for artists can only be used for the modernization or renovation of a building. There are also working capital loans and investment loans for artists and freelancers, which are also earmarked.
Mini loan or. Small loan for artist
If the consumer loan taken out has only a short term and a low loan amount of up to 10 %, you should be careful.000 EUR, it is a mini-loan or a loan for a specific purpose. Small loan for artists. This type of loan is usually paid out very quickly, often even immediately. For this reason, the small loan for artists is also known in the vernacular as a lightning loan, express loan or instant loan for artists.
Car loan for artists
The big advantage of the car loan compared to the consumer loan is that it usually has lower interest rates. What is the reason for this? The car to be purchased can be put up as tangible collateral for the loan, thus considerably reducing the lender's default risk.
Artists who want to finance a new car should therefore definitely look for low-interest car loans, not consumer loans. It would not be smart to take out a more expensive consumer loan for artists to end up financing a car!
Modernization loan for artists
If you want to renovate, refurbish or modernize your building, you need a modernization loan. This is also earmarked and relatively low-interest, especially since the building to be modernized can be provided by the borrower as material collateral for the loan.
Working capital loan for artists
Like any other freelancer, artists need working capital. These can be acquired, for example, with the help of an earmarked working capital loan for artists. Since the purpose of use is generally outlined and not formulated too strictly, this credit can also be used to pay invoices that are already due from business partners, for example.
Investment loan for artists
If larger purchases or investment goods have to be procured, an investment loan for artists is required. Unlike working capital loans, the relevant purchase items can be provided as collateral for the loan, which is why investment loans for artists usually have better terms than working capital loans for artists.
KREDIT 123's conclusion on the subject of credit for artists
Artists can get a fast, flexible and cheap loan for artists, even if many people think otherwise. Even if your income situation is uncertain or you have a negative SCHUFA entry, there are still ways to get fresh money.
A loan for artists can generally be applied for from german or foreign banks and credit institutions as well as from private lenders within or outside the family circle. A particularly noteworthy option is to take out a start-up loan from the kreditanstalt fur wiederaufbau (kfw), which offers attractive loans with favorable interest rates if all the requirements are met.
The most affordable and flexible loan for artists is private credit provided by family members or friends. Private loans from unknown private lenders can be considered rather expensive, especially since they can often only be found via online portals, which, if successful, then also charge brokerage fees that make borrowing more expensive once again.
Clearly understandable, written credit agreement
Anyone wishing to take out a loan as an artist should always make sure, regardless of who the lender is, that there is a clearly understandable, written loan agreement that regulates all conditions by mutual agreement and is signed by both parties to the agreement. Even in the case of loans with favorable interest rates and interest-free loans provided by acquaintances, it is almost essential to conclude a written loan agreement in order to prevent any misunderstandings later on in advance. It should be obvious that a professional and clearly formulated credit agreement also offers protection against the fraudulent methods of loan sharks!
Comparison of different credit offers for artists
Last but not least, the entire KREDIT 123 team recommends that when looking for a loan for artists, it is essential to obtain as many different loan offers as possible in order to be able to compare them with each other before concluding the contract. You often don't believe how much money you can save with a detailed credit comparison! If you are intelligent and think economically, you will certainly not refrain from carrying out a credit comparison in order to be able to find the best and most favorable credit for artists!