A low doc commercial loan is a loan that is available to business owners who may not have the traditional documentation required by most lenders. This type of loan can be helpful for business owners who may have difficulty qualifying for a traditional loan.
Things to know about Low Doc Commercial Loans
A low doc commercial loan allows business owners to access finance without providing extensive documentation of their business finances. This type of loan is typically used by small business owners who may not have the time or resources to provide detailed financial statements.
To qualify for a low doc commercial loan, borrowers typically need to have a strong credit history and a good business track record. They may also be required to provide collateral, such as real estate or equipment, to secure the loan.
Low doc commercial loans typically have higher interest rates than traditional loans, and they may also come with shorter repayment terms.
How to get Low Doc Commercial Loans
- If you are self-employed or a small business owner, you may be able to get approved for a low doc commercial loan without providing financial statements.
- Instead of providing tax returns, BAS statements and other financial statements, some lenders may only require you to provide proof of income with a declaration. This can be a much simpler and faster way to get approved for a commercial loan.
- The downside of low doc loans is that they often come with higher interest rates and shorter loan terms. This is because they are considered to be higher risk.
- Before you apply for a low doc commercial loan, compare a range of loans from different lenders to find one that best suits your business needs.
Who can get Low Doc Commercial Loans
Low doc commercial loans are available to self-employed people, contractors, and small business owners.
What is the minimum loan amount?
The minimum loan amount is usually $100,000.
Process of Low Doc Commercial Loans
As with any loan, the first step is to fill out a loan application. This is a relatively simple process but will take a bit of time to complete. Once the application is finished, the next step is to submit it to the lender of your choice. The lender will then review the application and decide whether or not to approve you for the loan. If you are approved, you will be asked to provide some documentation. This documentation may include financial statements, tax returns, and other documentation that the lender requires.
Once you have provided the documentation, the lender will then evaluate your creditworthiness. If the lender decides that you are a good risk, you will be approved for the loan. The interest rate on the loan will be determined by the lender, and you will be asked to provide a down payment. The size of the down payment will depend on the lender, but it will usually be a percentage of the total loan amount. After you have been approved for the loan, you will be able to close on the loan and begin making payments.
Low Doc Commercial Loans
Low Doc Commercial Loans are available for business people who don’t earn enough from the business to qualify for a standard commercial loan. The loan amount is based on the value of the property and the cash flow from the business. The interest rate is higher than for a standard commercial loan, and the loan term is shorter. Low Doc Commercial Loans are available from most major banks and from some non-bank lenders.
You will need to provide the following:
- A business plan
- A property valuation
- A personal guarantee
- A deposit
- Evidence of income from the business
- Evidence of your ability to service the loan
- You may also need to provide the following:
- Tax returns
- A personal asset and liability statement
- Personal tax returns
Why a business plan is needed for Low Doc Commercial Loans
There are a few key reasons why having a business plan is important when seeking a low doc commercial loan. First, a business plan provides lenders with a clear understanding of your business goals and how you plan on achieving them. This can help them to better assess your loan request and determine whether or not it is a good fit for their funding needs. Additionally, a well-crafted business plan can also help to improve your chances of securing funding by demonstrating to lenders that you have a solid understanding of your industry and your target market. Finally, a business plan can help you to develop a realistic financial projection for your business, which can be a helpful tool for negotiating loan terms and conditions with potential lenders.
Why Financial statements are needed for Low Doc Commercial Loans
There are a few key reasons why financial statements may be required for a low doc commercial loan:
To assess your business’s financial health
Lenders will want to see financial statements in order to get a clear picture of your business’s financial health and performance. This will help them to assess your ability to repay the loan and also give them an idea of the level of risk involved.
To assess your business’s ability to service the loan
Lenders will also want to see financial statements in order to assess your business’s ability to service the loan. This means looking at your revenue, expenses and cash flow to ensure that you will be able to make the loan repayments on time.
To assess your business’s tax obligations
Lenders will want to see financial statements in order to assess your business’s tax obligations. This is important information for them to have in order to assess the risk involved in lending to your business.
To assess your business’s collateral
Lenders will often require financial statements in order to assess the value of any collateral that you may be offering as security for the loan. This will help them to determine the loan amount that they are willing to offer you.