Low Doc Commercial Loans in Australia: A Guide

By: Aaron Robbins0 comments

In Australia, securing a commercial loan can be daunting, particularly for self-employed individuals or small business owners who may not have extensive documentation to support their loan applications. However, low documentation (low doc) commercial loans may provide a viable solution for such business owners.

Below, we provide a comprehensive guide to low doc commercial loans in Australia, offering insights into their features, requirements, benefits, and considerations.

Commercial low doc loans explained

A commercial low doc loan is a business loan specifically designed for borrowers who have difficulty providing traditional income verification documents such as tax returns and business financial statements. These loans are an alternative option that allows self-employed borrowers, sole traders, and small business owners to access the financing they need for various commercial purposes.

Simplified documentation

As the name implies, low doc commercial loans require less documentation compared to traditional business loans. Typically, borrowers are required to provide an income declaration, bank statements, and other supporting documents that demonstrate their ability to service the loan. For most applications, the only documentation that you’ll need to apply for a low doc loan through Diverse Funding Solutions is:

  • Your Australian Business Number (ABN).
  • GST registration.
  • Proof of Australian citizenship of permanent residency.
  • Evidence of your ability to make your loan repayments. For example, a letter from your accountant supporting your application or any business activity statements (BAS) or bank statements that you are able to provide.

Flexible eligibility criteria

These loans offer more lenient eligibility requirements, making them accessible to a wider range of borrowers, however, it can be trickier to get approved for a ‘no doc’ business loan than other forms of business lending. Lenders generally consider factors such as credit history, industry experience, and the value and stability of any assets being used as collateral for the loan.

What can I use a low doc commercial loan for?

You can use a low doc commercial loan for a range of business purposes! Common uses are:

  • To cover expenses incurred by your business

Aspiring entrepreneurs or individuals starting a new business venture may find it challenging to provide the extensive financial documentation required by traditional lenders. Low doc commercial loans can be an option to secure initial funding for business start-ups.

  • Debt consolidation

Business owners may accumulate multiple debts over time, such as credit card debt or outstanding business loans. Low doc loans can be used to consolidate these debts into a single loan with more manageable repayment terms.

  • Property investment

Entrepreneurs or small business owners looking to invest in commercial real estate can utilise low doc loans to finance the purchase of commercial property. This may include acquiring office spaces, warehouses, retail shops or industrial properties.

  • Business Expansion

Low doc commercial loans can be utilised to fund the expansion of an existing business. This may include opening new locations, purchasing additional equipment, or investing in marketing and advertising campaigns.

  • Working capital

Small businesses often require short-term capital to manage day-to-day operations, such as paying suppliers, covering payroll, or managing seasonal fluctuations. Low doc loans can be used to provide the necessary working capital.

  • Financing equipment

Many businesses require specialised equipment or machinery to operate efficiently. Low doc commercial loans can be used to finance the purchase or lease of equipment necessary for business operations.

Loan amount and term

The loan amount and term for low doc commercial loans can vary based on the lender and the borrower’s circumstances. Typically, loan amounts range from $50,000 to several million dollars, with loan terms generally ranging from three months to five years.

Interest Rates

Due to the higher perceived risk associated with low doc loans, interest rates may be slightly higher compared to traditional loans. Borrowers should carefully consider the overall cost, including any upfront fees, ongoing fees, and potential exit fees. The interest rate can vary based on factors such as the borrower’s creditworthiness, the loan-to-value ratio, and market conditions. If you’re applying for business finance (including low doc loans) with poor credit, you may need to approach private lenders, as major banks tend to shy away from the riskiness of lending to borrowers with limited documentation and a weak credit rating. Many traditional lenders apply strict lending criteria to their business loan offerings.

Using a security property

Offering a commercial property or residential property as security for your low doc loan is one way to improve your chances of being approved. Most lenders will set a loan-to-value ratio (LVR) of around 80%, meaning that you may borrow up to 80% of the equity in your property using a low doc loan.

Choosing the right lender for your low doc commercial loan

When considering low doc commercial loans, choosing the right lender is crucial. Here are a few factors to consider:

Reputation and experience

Opt for a lender with a solid reputation and experience in providing low doc commercial loans. Research their track record and customer reviews to ensure they have a good standing in the industry.

Interest Rates and terms

Compare interest rates, fees, and loan terms offered by different lenders to secure the most favourable deal. Ensure you understand the overall cost and any potential penalties or fees that may apply. Did you know: Diverse Funding Solutions offers some of the most competitive rates within the private lending market?

Loan features

Evaluate additional features the lender provides, such as flexible repayment options, redraw facilities, or the ability to make extra repayments. These features can enhance the loan’s suitability for your specific needs.

Expert advice

Seek guidance from finance brokers who specialise in low doc commercial loans. They can help you navigate the process, identify suitable lenders, and assist with the application and documentation requirements.

Why use Diverse Funding Solutions for your low doc loan?

Low doc commercial loans have become an attractive financing option for self-employed individuals and small business owners in Australia. While they offer flexibility and ease of access, carefully considering the associated requirements, costs, and lender options is crucial. At Diverse Funding Solutions, we have access to over 200 of Australia’s top private lenders. We can work with you to find a lender who can provide the flexibility and fast funding you need to access the best low doc loan for your business. Like to know more? Talk with our team, today!

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