Low Doc Loans: A Simple Guide for ABN Holders

What Are Low Doc Loans?

Low doc loans are designed for individuals and businesses with an Australian Business Number (ABN) who may not have the traditional paperwork to verify their income. These loans are particularly useful for self-employed individuals, freelancers, and small business owners.

Who Can Apply for a Low Doc Loan?

• ABN Holders – Ideal for businesses operating for over 12 months.
• Self-Employed Individuals – Those without traditional pay slips or tax returns.
• Small Business Owners – Especially those with fluctuating income who need flexible financing options.

Benefits of a Low Doc Loan

• Simplified Application Process: Unlike standard loans that require detailed financial records, low doc loans need fewer documents, making the process easier and faster.
• Faster Loan Approvals: Since the paperwork is minimal, approval times are generally quicker. This is especially true for businesses that have been operating for over a year.
• Flexible Loan Terms: Lenders may offer flexible repayment terms, making it easier for self-employed individuals to manage their finances.

How Does the Length of Time an ABN Has Been Registered Affect the Loan?

ABN Registered Over 12 Months

• Easier approval process.
• Lower interest rates compared to newly registered ABNs.

New ABN (Less Than 12 Months)

• May require additional documentation, such as bank statements or Business Activity Statements (BAS).
• Interest rates may be higher due to a shorter financial history.

Key Factors That Influence Loan Approval and Interest Rates

1. Credit Score

A strong credit score increases the chances of approval and may lead to better loan terms.

2. GST Registration

If the business is GST-registered, it may be viewed more favorably by lenders.

3. Deposit Amount

• A deposit of at least 20% can help secure a lower interest rate.
• If the applicant does not own property or land, a larger deposit may be required.

4. Providing Bank Statements or BAS

Some lenders may request bank statements or two recent BAS statements to assess the financial health of the business. Providing these can improve the chances of securing a competitive loan.

Example of a Successful Low Doc Loan Application

In 2010, Alex and Casey from West OZ Concrete Pumping needed financing for a second concrete pump. Since their business was relatively new, the lender required a security deposit. Instead of using cash, we arranged to use their existing second pump as security. This allowed them to grow their business without tying up their working capital.

How to Apply for a Low Doc Loan?

Step 1: Assess Your Financial Position

• Check your credit score.
• Ensure your ABN is active and, if possible, GST-registered.

Step 2: Gather Necessary Documents

Even though less documentation is required, having the following can improve loan terms:

• Bank statements (last 6 months)
• BAS statements (last 2 quarters, if available)
• Proof of deposit (if applicable)

Step 3: Compare Lenders and Loan Options

Not all lenders have the same criteria for low doc loans. Comparing multiple options can help find the best fit.

Step 4: Submit Your Application

Once you have the required documents, submit your loan application and wait for lender approval.

Get Started with a Low Doc Loan

If you’re a self-employed individual or a business owner looking for a loan with minimal paperwork, a low doc loan could be the right option. Preparing the right documents in advance can help secure better rates and smoother approval.

For more information, feel free to message me or get your quote.