Category: Business Loans

A low doc business loan can be an ideal choice when you don’t have sufficient documentation. While you’d prefer to apply for a traditional bank loan, it might not always be possible. For instance, if you don’t have the extensive paperwork (that standard business loans need), it can leave you in a tricky position. Fortunately, low documentation business loans provide a viable alternative. So, what is a low doc business loan and how does it differ from a traditional business loan?

An Alternative Business Loan

A low doc business loan is similar to a standard business loan – with a difference or two. So, a low documentation loan focuses on small business owners that don’t have the typical paperwork to support their application. For instance, instead of the usual documents presented to a lender, alternative ones can be used. It allows businesses to get access to funding when they need it most.

The Differences Between Standard and Low Doc Business Loans

When you apply for a standard business loan, most lenders would require balance sheets, cash flow statements, income statements, tax returns for two or more years, income proof and more. Unfortunately, not every business has these documents at hand (for one reason or another). Fortunately, a low doc business loan does not require such extensive paperwork. For instance, you may be required to show business activity statements and other paperwork.

Typically, low doc business loans come with higher interest rates than standard business loans. The reason is the fact you’re not eligible for a traditional loan. It means lenders deem you a ‘high-risk’ and that would usually incur a higher rate of interest. However, it will vary from each lender and it may be possible to reduce your rate.

What Might You Need for a Low Document Business Loan?

There are several reasons why a business or business owner doesn’t qualify for a traditional loan. For example, you have a small business or it has just recently formed which means you wouldn’t have sufficient documents yet. It could also be down to your business. Sometimes, you just don’t have the extensive paperwork to show. Credit also plays a part in your eligibility. That’s why a low doc business loan is often necessary.

The Types of Business Loans Available

Typically, there are three main types of low doc business loans available. You have a no doc loan, low doc loan and leasing loan. So, a no-doc is an ideal choice for those who have limited paperwork or can’t show income proof. With a lease loan, you can show your income from the lease to obtain the loan.

Is There a Borrowing Limit with a Low Document Business Loan?

Borrowing limits are dependent on you, the lender and the type of business loan you have. For instance, a secured loan might allow you to borrow a higher amount – if you have sufficient collateral. Unsecured business loans, however, could limit how much you can borrow. Again, it depends on several factors. A low doc business loan may come with borrowing limits but can be beneficial to your business.

A Low Document Business Loan Can Help You

When you don’t qualify for a standard business loan, a low documentation business loan could be the ideal alternative. Of course, these loans come with higher interest rates but they do still have their advantages, including giving you a funding option. While low doc loans differ slightly from traditional loans, they offer a viable solution to consider. Low doc business loans can be the ideal choice for many.

7 Things to Know About Low Doc Business Loans in Australia

By Jerrold Reinger

On February 17, 2023

In Business Loans

Low doc loans have become a necessity for businesses nationwide. Low documentation business loans can be a useful way to secure finance for the company without having a mountain of paperwork to back your application. Traditional bank loans, however, can be incredibly frustrating at the best of times. Standard loans require lots of paperwork; if you don’t have such things, it could prove troublesome. Fortunately, low documentation business loans can be ideal. So, what things should you know before applying for a low doc business loan?

Most Business Owners Will Be Eligible

While eligibility may vary from each lender, most business owners will be able to apply for a low documentation loan. What’s more, most will be accepted. Of course, you do need to have a good credit history and score. You can be a new business or an established business owner, and you won’t need a lot of paperwork to support your application. A low doc loan can be quite useful for most business owners.

Low Doc Loans Are Similar to Traditional Loans

A lot of people worry a low documentation loan will come with greater risks and more pitfalls; fortunately, that’s not always the case. A low doc loan can be very much like a traditional bank loan – with a few exceptions. Firstly, you require less documentation to support the application. Secondly, the interest rates can be slightly higher than traditional loans, although they tend to be at a fixed rate.

Never Borrow More than Necessary

Each lender varies and that means the amount you can borrow can vary also. It is, however, important to work out how much you really need to borrow. For instance, you have the option to borrow up to $10,500. You only need $3,750; that should be your top limit. Remember, anything extra can be wasteful and may be difficult to repay. Low doc loans are there to help, but you should only borrow what you need and no more.

You’ll Need Less Paperwork

One of the best things about a low doc loan is that you require less paperwork. It is ideal, especially for those who don’t meet standard loan requirements. For instance, you have personal financial statements, along with a year’s worth of business activity statements. These would be sufficient for many low documentation business loan lenders but not for a traditional loan. You can also read more about Low Doc Home Loans Available for Self Employed by clicking here.

It Offers Flexibility for Your Business

Low doc loans tend to be a little more flexible which is ideal for most businesses. Some lenders will allow you to pay in lump sums or a monthly payment schedule. That can be useful for businesses across the country. It’s one of the biggest reasons why more look to low doc business loans than ever before.

Interest Rates Can Be Fixed

As said previously, a low doc loan typically has a higher interest rate. However, most rates are competitive and reasonable. What is more, most lenders fix their rates. This means you start and end with the same interest rate. Nothing is changed halfway through. It keeps the loan fair and reasonable. Visit https://treasury.gov.au/coronavirus/sme-recovery-loan-scheme to read about SME Recovery Loan Scheme.

Lenders and Loans Will Vary

It’s important to compare several loans and lenders to find the right option for you. Remember, lenders can offer several types of low documentation business loans and they can vary in many ways. You should compare them as much as you can so the right one is found. Low doc loans can work for you if you take the time to find the best one.

The Modern Way to Borrow Money

Traditional loans do not always work for each individual. Sometimes, traditional bank loans can be limited and that puts you in a tricky position. It can be very difficult to be turned down for a business bank loan; fortunately, you have a few new options available. Low documentation business loans offer greater flexibility, a fixed interest rate, and more. A low doc loan can be a wonderful alternative to consider.