Low Doc Business Loans For Sole Traders in Australia
We help sole traders find the best low doc business loan for them. It's free to compare with no credit score impact.
How Lend can help you get a low doc business loan
Compare multiple lenders
Access low doc business loan options from specialist lenders. We help you compare rates, fees and more.
Tailored solutions and support
Lend’s SME specialists offer solutions for sole traders beyond what’s traditionally available from the banks. We'll guide you on your borrowing capacity and eligibility, and manage your loan from application to funding.
Smart tech
We’ve built technology to make getting low doc business finance online faster and easier. No clunky processes or paperwork.
What is a low doc business loan?
A low doc (low documentation) business loan requires less financial documentation than a standard small business loan. They are commonly used by sole traders, self-employed borrowers and startups looking for finance.
Usually when you apply you’ll need to provide financial statements or paperwork to show your business income, assets and liabilities. But a low doc business loan offers a handy workaround.
There’s also the option of a no doc (no documentation) business loan which requires no proof of income documentation.
Low doc or no doc loans present a higher risk to the lender, so interest rates will be higher than a standard business loan.
A low doc business loan usually involves unsecured finance but you may also be able to get a secured loan, such as a business car loan, with low document requirements.
Low doc business loans in Australia are typically offered by specialist lenders willing to take on more risk than banks.
Low doc business loan pros & cons
Pros
• Fast and simple application
Requires minimal paperwork, so you can get approved and funded quickly.
• Accessible for small businesses
Available to most businesses, including sole traders and startups with limited financial history.
• Bad credit considered
Lenders may still approve your application even if you have a poor credit score.
• Flexible use of funds
Can be used for a wide range of business needs, from working capital to equipment purchases.
Cons
• Higher interest rates
Rates are typically higher than standard business loans due to the increased risk to lenders.
• Larger repayments
Shorter loan terms can result in higher monthly repayments, impacting cash flow.
• Possible exit fees
Some lenders charge fees if you repay the loan early or break the contract.
• Lower borrowing limits
You may be restricted to smaller loan amounts unless you provide collateral.
Who’s eligible for a low doc business loan?
Most Australian businesses and self-employed individuals can qualify for a low doc loan if they meet the minimum eligibility criteria, including:
- Your business must be GST-registered
- You must have an active ABN or ACN
- You must be able to provide proof or some other commitment that you can repay the loan in full
- A good credit score — the minimum credit score for business lending is around 400.
How to apply for a low doc business loan
When you apply for a low doc business loan, you’ll still need to provide some supporting documentation, although it will be less stringent than other types of business finance.
Low doc paperwork
You'll need to submit some alternative forms of financial documentation, including bank statements for the last 6 months, business Activity Statements (BAS) or credit sales/merchant statements, a signed declaration confirming your current business income, a letter from your accountant.
You may be asked to provide a personal guarantee if it’s an unsecured business loan, which would mean you would become personally liable for the loan if the business cannot repay it.
Business information
Lenders will also ask you to provide information about your business and about yourself, including proof you’ve been operating for the minimum required period and identification documents.
The lender typically carries out a credit check, looking at your credit report and score.
There'll either be a fully online application process, or in some cases, the lender will need to follup up with a call to check on some of the detail.
How much can you borrow?
You can borrow between $5,000 and $1 million with a low doc business loan, depending on the borrower. Your borrowing capacity will depend on your business' overall credit profile and the type of loan you apply for. Here are some median loan amounts requested for different types of asset finance, according to Lend proprietary data.
- Low doc chattel mortgage: $45,000
- Low doc finance lease: $100,000
- Low doc asset finance: $90,000
Low doc loan factor rates
Unsecured low doc business loans may charge a factor rate rather than an annual interest rate. A factor rate is expressed as a multiple of the loan, for example, 1.15 times the loan balance.
While you’ll still make regular repayments over the course of the loan, your interest will be calculated on the initial loan principal rather than the reducing balance. This means the amount of interest you pay won’t change, even if you make extra repayments. Use our factor rate to APR calculator to convert your factor rate into an annual percentage rate.
Low doc loan terms & repayments
Loan term
Most low doc unsecured loans have terms of between six months and five years.
Fixed or variable interest
Whether your loan is fixed or variable will impact the amount you pay, whether or not you have the flexibility to make early repayments, and how exposed you are to interest rate fluctuations.
Repayment schedule
You can make equal monthly payments or variable payments to match your cashflow.
Additional restrictions
Be aware that some lenders may impose restrictive conditions on account of the additional risk of a low doc loan.
For example, you could be prevented from offering credit terms to your customers or dealing with customers with a poor payment history. It's important to consider the potential impact of these conditions when evaluating loan products.
Tax implications
The type and structure of your loan can have a major impact on your financial circumstances, and the costs can be substantially influenced by your tax position. Be sure to consult a finance broker to help you select and structure your loan.
Low doc business loan vs bank business loan requirements
As you can see below there are significantly less requirements with a loc doc business loan versusu a standard bank loan...
Low doc business loan
- Bank statements for the last six months
- Business activity statement (BAS)
- Signed declaration of income or certificate of income signed by an accountant
Bank business loan
- Balance sheets for the past 2-5 years
- Profit and loss (P&L) statements for the past three financial years
- Sales and cashflow projections
- Copies of key contracts or sales agreements
- Key liquidity, efficiency and profitability ratios
- Your personal and business credit records
- Business plan, including market and competitor analysis
- Detailed business case for the loan indicating how you will use the funds
- Details of the assets you propose to offer as collateral for your loan, including valuations and proof of ownership
FAQs about low doc business loans
FAQs
You typically don’t need to provide a deposit for a low doc business loan as lenders will generally finance 100% of the loan cost if it’s under $150,000. However, you may choose to contribute a deposit to lower your loan amount and repayments. Alternatively, you may be required to contribute a deposit or collateral for the loan if you want to borrow larger amounts.
Yes, you may still get a low doc loan if you have impaired credit, providing you meet the lender’s most important eligibility criteria — the ability to service the loan over the agreed term. Your interest rate will be higher to reflect the added risk to the lender. You can alternatively speak to a finance broker about bad credit business loans.
Yes, you can use a low doc loan to buy business equipment or other assets, although interest rates are higher and loan terms are shorter (which means higher monthly repayments). It’s best to look for equipment finance solutions, although these will require you to supply more documentation.
Yes, you can use a low doc business loan to purchase a commercial investment property, although lenders will only finance a percentage of the value (up to 80%). Low doc commercial loans for property have longer terms of up to 30 years.