Are you one of the 406,365 new business owners who started trading this past year? If so, congratulations! However, as a new business owner, you may find it challenging to qualify for finance. But don’t worry, low doc commercial loans could be the ideal solution.
What Are Low Doc Commercial Loans?
Commercial low doc loans are finance products tailored to the needs of businesses who may find it difficult to secure traditional finance. If your business has been trading for less than 2 years or has fluctuating incomes (perhaps due to seasonal variations), then it can be challenging to meet strict lender criteria. A low doc business loan offers greater flexibility and has a simplified application process, making it easier for you to demonstrate your business is stable, profitable and can service a loan.
6 Things to Know Before Applying for Commercial Low Doc Loans
If you’re thinking about applying for low doc commercial finance, there are a few things you should know first. This will make it easier for you to secure the best loan to suit your business needs.
1. A Low Doc Business Loan Can Offer Great Benefits
Low doc loans have an undeserved reputation as a “last resort” finance product. However, these loans can offer a great range of benefits for many business operators. They’re much more flexible (allowing you to tailor the loan to the needs of your business), the application process is simple and the approval process is often quite fast.
2. You Will Need Some Documentation to Apply
A low doc loan MAY still require some paperwork. You may be asked to provide:
- Bank statements (personal and business).
- BAS statements.
- Other financial documents (such as a letter from your accountant).
3. You’ll Need to Meet the Eligibility Criteria for Low Doc Loans
In addition to the above paperwork, you’ll typically need the following to be eligible for a low doc loan:
- A valid and active ABN (Australian Business Number).
- A good credit history (this isn’t essential, but it will help you secure better terms).
- An income declaration verifying your business earnings.
- At least some experience (preferably operating for at least 12 months).
- A personal asset and liability statement.
- A declaration confirming how the funds will be used (e.g., purchasing equipment, expanding operations, etc.).
- Some lenders may also ask you to provide some form of collateral (such as residential or commercial property) to secure the loan.
4. There Are Misconceptions About Low Doc Loans
The two most common misconceptions about these loans are:
A. They’re only for high-risk borrowers.
B. They have crippling interest rates.
While they used to be associated with higher-risk borrowers, low doc loans can now benefit a wide range of business owners seeking financial flexibility. And although interest rates will vary depending on the lender, low doc loans are usually quite competitive.
5. There’s A Difference Between a Low Doc and No Doc Commercial Loan
Some people hear “low doc” and think this is the same as a no doc commercial loan. In reality, there are some significant differences, including:
- Very few lenders offer no doc loans.
- They may require a significant deposit.
- The eligibility criteria are quite strict.
6. You Should Always Get Expert Financial Advice
Like any major financial decision, it pays to get expert advice. A commercial finance broker can help you find a competitive loan that meets your needs and that is personalised to suit your business.
Muscle Money Can Help You Secure Low Doc Commercial Loans
Navigating business finance can be complicated, but finding the right low doc commercial loan can help your business grow and thrive. For tailored advice, and to find the best loan for your business needs, contact Muscle Money today. Let us help you grow your business with the right financial solutions.
Caleb Waye-Harris, Senior Manager of Asset Finance at Muscle Money, has almost 15 years of relevant experience in the finance industry. His extensive background includes project management, consumer and commercial lending and asset-based lending.
