MatthewHSE - 1:50 pm on Apr 1, 2010 (gmt 0)

My experience has been that lenders want to see two years of tax returns before loaning money to the self-employed. As others have said, the time you're first going self-employed is probably NOT the time to take on new debt. There will be plenty of time for those things once you've established a track record with your business.

The answer to your question may be in the thread title itself. Lenders know that a loan is a risk in the first place - and at least doubly so when the borrower is a risk-taker themselves. Most small businesses do not succeed; the Bill Gates and Steve Jobs are few and far between. Most entrepreneurs I know had several businesses before they finally started one that made money. I personally was owner or part-owner of over 20 small start-ups before one finally took off.

And, as much as everyone would agree that intelligent risk-taking entrepreneurs should be encouraged, the bank doesn't really consider that part of their job. ;)