Low doc business loans are tailored for those unable to furnish standard income evidence, like tax returns. While they offer flexibility, obtaining approval can be challenging and may incur higher interest rates. 

Availability of Low Doc Business Loans 

Yes, low doc business loans are available but securing approval is often challenging due to higher associated risks. Banks categorize applications and businesses based on risk, ranging from A to D and 1 to 15, respectively. The highest grade is 1A. Approval depends on a robust application and a compelling business loan proposal. 

Different lenders have varying criteria for low doc business loans. Choosing the right lender can ease requirements. 

Borrowing Limits and Criteria 

Typically, you can borrow up to 80% Loan to Value Ratio (LVR) against the property securing the loan. Some non-bank lenders may exceed 80% LVR. Negotiating reduced interest rates is possible when borrowing 65% of the security property. 

Loan amounts hinge on the lender and risk assessment. High-risk profiles might limit borrowing to under $1 million. 

Income Proof Requirements 

While an income declaration form is standard, additional evidence may include: 

• Letter from your accountant 
• Business Activity Statements (BAS) 
• Bank account statements 
• Income forecasts (subject to conditions) 

Interim financial statements, especially if using MYOB or a bookkeeper, can serve as evidence, subject to high income, verification, and supplementary documents. 

Cautionary Considerations 

Low doc business loans undergo conservative assessment due to higher risk. Common rejection reasons include insufficient declared income, high-risk property location, low credit rating, bad credit history, and unsuitable property types. 

Bad credit low doc loans exist but demand additional requirements and a robust application. 

Acceptable Security Properties 

Non-specialized properties or residential properties are generally acceptable, while remote or small rural locations may face rejection. 

Boosting Income through Expenses 

Increasing taxable income by adding back expenses is a strategy, often requiring two years’ tax returns. Eligible expenses include superannuation contributions, losses carried forward, negative gearing deductions, one-off expenses, trust distributions, and depreciation. 

Finding Low Doc Business Loan Rates 

Rates aren’t always advertised, making it challenging to compare. Interest rates vary among lenders, and seeking the most favorable terms requires diligence. 

Switching to Full Doc Loans 

After two years of impeccable conduct, some lenders allow switching to a full doc business loan, potentially reducing interest rates and saving costs over the loan term. Full income evidence may be required during the switch.