No Doc Business Loans

Name: No Doc Business Loans
Creator: Savvy
Published: 2022-01-20T13:57:33+10:30

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It won't affect your credit score.

Written by , updated on July 26th, 2023

What are no doc business loans and how do they work?

No doc business loans are largely as they appear: they’re a type of business finance whereby you can apply for a loan without supplying any major financial documentation. No doc loans are primarily used by small startup businesses looking for finance or sole traders who otherwise don’t meet the requirements set by conventional lenders and can’t supply the evidence needed of their business’ turnover. Instead of the usual documents, you’ll likely be required to submit the following:

Personal ID such as a passport or driver’s licence
ABN/ACN and GST registration
Business bank statements
Record of expenses such as rent

While some standard business loans may require you to supply further business financials, no doc finance sidesteps this requirement. Because of this, they’re often very quick to be approved, streamlining the application process considerably by avoiding the need for lenders to pore over documents.

In most cases, no doc business finance won’t require the borrower to be asset-backed, meaning you won’t need to supply a valuable asset you own, most often property, to act as collateral for your finance deal and instead opt for an unsecured business loan. Lenders may request security to offset the increased risk taken on by them by not requiring you to supply any evidence of your business’ financial situation beyond a self-declaration of business revenue, but this is less common than unsecured.

Risk is a relevant topic to discuss when talking about no doc loans, as they’re often considered the most risk-laden type of business finance due to their lack of documentation requirements. Not only is this offset by collateral as mentioned, but also by a higher interest rate and fees charged.

While your business may be in a position to claim the interest portion of your loan as a tax deduction, you should always look to minimise it in the event you do end up having to pay it. Regardless, though, steeper fees are always a consideration, so it’s important to assess what fees you may be charged by your lender before you sign up for your loan.

What’s the difference between no doc and low doc business loans?

No doc and low doc business loans are, for all intents and purposes, the same product. Where they may differ simply comes down to which lender you end up deciding to go with. For instance, some financiers may not require you to supply documents such as GST registration or BAS statements on their no doc loan, while others will include these as part of their assessment.

It’s important to note that what many traditional lenders, such as banks, consider low doc and no doc are actually considered full doc by a range of unsecured business financiers who operate online. The definition of no doc and low doc in lending circles has changed over the years, with business bank statements now considered by many lenders to be the major financials required to proceed with an application.

Because of this, no doc and low doc commercial loans have become far more accessible for small, medium and large businesses all around Australia. With more lenders in the market offering affordable and accessible loans to borrowers, they’re increasingly common and continue to serve as the fastest and easiest financial solutions to obtain.

Savvy is a great place to compare business loan offers. With reputable lending partners all across Australia, you can get started with your application today after choosing from our comparison table and have your loan funds hit your account as soon as a few hours after.

Types of business loan

Unsecured business loans

The most common type of business finance, unsecured loans enable businesses to access the funds they need without attaching an asset to the loan as security. Some lenders may allow you to borrow up to $500,000 and, because there's no collateral, offer same-day approval.

Secured business loans

If your business already owns valuable assets, such as property or expensive equipment, you may choose a secured business loan instead. These loans may increase your borrowing power beyond what an unsecured loan can offer and, crucially, typically come with lower interest rates.

Small business loans

Business loans don't always have to be worth hundreds of thousands. If you're operating a small business and need a boost to help you keep on top of your expenses or expand your company, you may be able to take out a loan starting from as little as $5,000 and unlock further capital.

Low doc business loans

Just because you don't have all the required documents for a standard business loan doesn't mean you're out of options. Low doc finance enables you to use alternative documentation, such as other business financials, in the application process to access the funds you need.

Lines of credit

A commercial line of credit allows you to draw from your loan account whenever your business needs access to their funds, instead of managing a lump sum and repaying it like a regular loan. This can add flexibility to your finance arrangement, providing money when you need it.

Invoice finance

Invoice finance presents another option to business operators looking to free up cash through outstanding invoices yet to be paid by their customers. Your invoice finance can either be invoice discounting or factoring, which present different options when it comes to your invoices.

Equipment loans

A common reason for seeking out a loan is to purchase commercial equipment. You can do this either with an unsecured arrangement or one with the equipment itself as collateral, with the latter potentially increasing your borrowing power and lowering your interest rate.

Supply chain finance

With this finance, when your business purchases product, your supplier provides an invoice which you send to your financier and pledge to repay by a set date. From there, your supplier sells the invoice to your financier at a discounted rate, while you repay the full amount to your financier.

Inventory finance

Under an inventory finance agreement, your lender pays your supplier directly for inventory, which allows it to be signed off and sent to you. From there, you can pay off your debt within a pre-determined period to your lender, which may be longer than the regular debtor period.

Overdraft facility

An overdraft facility is attached to an existing financial account belonging to your business, such as a transaction or savings account, and enables you to borrow up to a set limit after the account’s balance reaches zero. These overdrafts are repaid with interest, but only on what you use.

Cash flow loans

You may simply be in a position where your business needs a boost to its cash flow. If this is the case, there’s a range of stop-gap solutions which may be suitable for your situation, from standard unsecured loans to specialist cash flow loans, invoice finance or even an overdraft.

Why compare business loans through Savvy?

100% free service

It won't cost you a cent to compare a range of business loans through Savvy, enabling you to come back at any time.

Reputable lending partners

You can compare business loan offers through a range of trusted Australian lenders, giving you more confidence in the process.

Online comparison process

You can fill out our simple online form to generate business finance quotes tailored to your business' needs in minutes.

The pros and cons of no doc and low doc business loans in Australia

PROS

Accessible for small businesses

By sidestepping extensive financial requirements, more small businesses are now in a position to obtain a loan.

Fast to process and approve

Once your application is sent off, you can be approved and funded within a matter of hours in some cases.

Convenient online applications

You don’t have to leave your home or office when applying for these loans, as they’re 100% online from start to finish.

Bring financial goals within reach

Businesses can use their loan to cover expenses and make purchases they otherwise may not have been able to achieve.

CONS

Fewer lender options

By not providing the full two years of business financials, you’ll rule out some potential options in the form of banks (although you won’t be lacking in options).

Higher interest rates

The higher risk posed by no doc and low doc business loans in Australia will often result in higher interest rates and fees on your loan.

Shorter repayment terms

Because of that risk, you may not be able to take the time you prefer to remain comfortable with your loan repayments.

Common no doc business loan queries

Can I get a no doc business line of credit?

Yes – there are lines of credit offered by lenders which come with essentially the same documentation requirements. A no doc business line of credit is an alternative finance option for businesses which enables them to draw funds whenever they wish and only pay interest on the amount used.

Are there low or no doc business equipment finance options?

Yes – equipment finance is different to a standard business loan in that the asset itself is used as collateral for the loan. There are also, however, low doc equipment finance options for businesses who can’t supply financials in the same way as any other no or low doc commercial loans. In most cases, these too are used primarily by sole traders and startup businesses.

How much can I borrow with a no doc business loan?

The borrowing range offered on no doc unsecured business loans will vary between lenders. You can generally be approved for any amount between $5,000 and $500,000 at its minimum and maximum, but this will also come down to a number of personal variables, including:

Business credit score
Trading time
Total cashflow
Value of assets and liabilities
Borrowing history

How long are their loan terms?

Similarly, loan terms are dependent on your business’ financial situation and how great a risk it poses to your lender. However, in general, you can take out your loan over as few as three months up to as many as five years. If you decide to go for a line of credit, you may not have a set end date, as they can be revolving and remain open as long as they’re viable.

What can I use my no doc business loan for?

Just about anything you like – there aren’t any restrictions on how you can use your business loan, provided it’s for business use. This means that you can use it to pay for inventory, fit out your business premises or even buy an existing business.

How much will I need to put down as a deposit?

In terms of how much of a deposit you need, the answer is $0. Our business lending partners can finance up to and over 100% of the cost of the expenses you’re looking to cover. This is because no doc unsecured business loans aren’t tied to any collateral which dictate their value. However, if your business is in a position to do so, you may benefit from reducing your loan amount by reducing your interest and associated fees.