Low doc and no doc loans are finance options where you don’t have to provide standard business loan documentation.
‘Low doc’ is an abbreviation for ‘low documentation’ and ‘no doc’ is short for ‘no documentation’.
What documents do you normally need for a business loan?
Standard business loans typically require you to provide proof of your business income. Necessary documents include:
- your audited business profit and loss statements for the last two or three years.
- your business balance sheet for the past few years.
- your business tax returns and notices of assessment from the Australian Taxation Office (ATO) for the past two or three financial years.
- your individual tax returns and notices of assessment from the ATO for the past few years.
Lenders use this information to determine your ability to make your loan repayments.
What documents do you need for a low doc loan?
A ‘low doc’ loan usually doesn’t require any of the complex documents necessary for a standard business loan.
Instead, you can simply supply simple documentation such as:
- a declaration of your income.
- a supporting letter from your accountant.
- your ABN and GST registration details.
- your business bank account statements, ideally showing a year or more of transactions.
- your recent Business Activity Statements (BAS), ideally for a year or more.
- interim financial statements (if you have them).
Low doc loans usually have higher interest rates than standard business loans to cover the lender’s higher risk.
Is there any documentation required for a ‘no doc’ loan?
No. You usually just sign an affordability statement.
This statement confirms your understanding of the amount borrowed and your ability to make the necessary repayments.
But it’s important to understand that ‘no doc’ loans are much harder to get than ‘low doc’ loans.
They also have higher interest rates because they are even riskier for lenders.
What types of borrowers get low and no doc loans?
Low and no doc loans are suitable if you’re self-employed and you can’t supply all the documents you need for a standard business loan.
- if you earn a lot of cash income.
- if you’re just starting your business.
- your income is rapidly increasing and it isn’t yet reflected in your tax returns or business financial statements.
- you need quick finance and you can’t afford to wait for a lengthy application process.
- you have a lot of ‘non-cash’ expenses (like depreciation) that reduce your business income but not your cash flow to pay off a loan.
- you have a complex business structure (like a trust).
Potential uses for low and no doc loans
Low doc and no doc loans can usually only be used for business or investment purposes.
For example, to:
- buy a business, commercial premises, business equipment or stock.
- boost your cash flow.
They are usually taken out in a business, company or trust name.
Where can I get a low or no doc loan?
Mainstream lenders are less likely to approve a low or no doc loan than a private lender.
We are private lending specialists at DFS.
We arrange low and no doc loans for our clients. We have:
- access to over 200 private lenders
- an easy online application process.
- no credit checks if you can provide property as security.
- quick approvals.