No doc business loans

A no doc business loan is one assessed without financial documents — no tax returns, no BAS, no management accounts and no valuation. HomeSec lends $20,000 to $5,000,000 against Australian real property on that basis, to 80% LVR residential and 70% commercial, settling in as little as 24 hours on a clean file. The security can be residential, commercial, rural or vacant land, held as a first or second-ranking mortgage, and a commercial title is assessed on the same two questions as a house. You still prove who you are and declare the business purpose; what you do not have to prove is the last two years of trading.

What "no doc" actually means

It means no financial documents. No tax returns, no BAS, no profit and loss, no management accounts, no bank statements, no accountant's letter and no valuation. That is the list of things a bank would spend three to eight weeks collecting and verifying, and it is the reason a bank takes three to eight weeks.

It does not mean no documents. Anyone telling you a secured loan can be written with no paperwork at all is describing something that does not exist in Australia. Here is the whole list of what we do need:

Why financials are the wrong evidence here

A set of accounts describes the last two years. For a great many of the businesses that call us, the last two years are the least useful thing anyone could look at: a builder who has just had a progress claim certified, a company that has finished paying down an ATO arrangement, an operator whose figures still carry a year nobody is going to repeat.

An algorithm cannot see why the last two years look the way they do. A person can, and that is the whole reason files we write are ones a scorecard would have rejected.

So we assess two things instead. What is the property worth, and how does this loan get repaid. If both answers are sound, the accounts would not have changed the decision — and if the exit is not sound, no set of accounts would have rescued it.

What the security can be: commercial, residential or rural

Residential, commercial, rural or vacant land — four kinds of Australian real property, and the category of title decides much less than people expect, because the two questions above are asked the same way of all of them. A no doc loan against a shop, a factory unit, a warehouse or a block of land is the same file as one against a house: same evidence, same assessment, same person reading it.

Up to 80% on residential and 70% on commercial. Lower on large acreage, and LVRs may reduce on properties worth less than $800,000. First or second-ranking mortgage. Cross-collateralisation across multiple properties. Your home can be the security.

Almost anywhere in Australia — metro, regional and rural, with towns of 3,000 or more people as a guide; smaller populations on merit. Where the security is commercial and the purpose is a commercial one, commercial lending is set out end to end on its own page. Where there is equity spread across more than one property, how a lender sits on the title is the part worth reading first, because it is what sets the amount.

The trade you are making

No doc lending is faster and it is available when bank lending is not. It also costs more than a bank, because it is secured on property and priced per file rather than against a salary and a credit score. There is a real exchange happening and it is worth naming: you are paying for speed and for the absence of a document collection process. This is how it is priced, and every fee that exists.

The honest limitation is the same one that applies to everything we write. This solves a timing problem, not a solvency problem. If a business is structurally losing money, borrowing against the family home without anyone looking at the accounts is precisely how a bad position becomes an unrecoverable one. We decline files on that basis regularly, and we would rather say so in the first ten minutes than take the file.

Low doc, no doc, self-employed — where each fits

Lender categories described generally; individual lenders vary.

Who no doc loans suit

The self-employed and sole traders

Income that arrives unevenly and is netted against expenses does not survive a serviceability test. The property does.

A business whose last year was not typical

A bad year that will not repeat, or a good one not yet in the accounts. Either way, the accounts are the wrong evidence.

A new entity, or one that has just restructured

New ABN, new company, a trust set up in March. Nothing to show and nothing to hide.

Anyone whose accountant is three months behind

Lodgements pending is not a credit event here. It is the ordinary state of a busy business.

A borrower who has been declined for low doc

Low doc still tests serviceability, from thinner paper. If that is where it failed, it does not fail here.

Can a sole trader get a business loan?

Yes, and the entity is rarely the obstacle people expect. Companies, trusts and sole traders — including start-ups. A sole trader borrows in their own name with an ABN behind it; a company or a trust borrows as the entity. What a lender running a serviceability test cares about is which of those can evidence an income — and that is where a sole trader comes unstuck everywhere else.

The difficulty a self-employed borrower meets at a bank is almost never the business itself. It is that the evidence the bank needs does not exist in the shape it needs it. Income arrives unevenly. It is netted against expenses before anybody sees a figure. The most recent set of accounts describes a year that has already finished, and the accountant may still be three months from finishing it. A serviceability test reads every one of those as risk.

There is no serviceability test here, so none of that is weighed. The loan is secured against real property and assessed on the security and the exit, which is why being self-employed — sole trader, contractor, subcontractor, or a director paying yourself whatever is left — changes nothing about the assessment. It is also why a start-up with no trading history at all is considered on the same basis as a long-established one.

From the call to the money

What it costs

Priced per file, on the property, the position, the amount and the exit. No rate is published, because a rate with "from" in front of it is the best file's number. How it is priced, and every fee that exists.

Business purpose is not a technicality

HomeSec provides credit wholly and exclusively for business and investment purposes. Credit provided for those purposes is not regulated under the National Consumer Credit Protection Act 2009 (the NCCP Act), and the protections available to consumer borrowers do not apply.

That is why the declaration is on the list above. It is the document that places this lending outside the NCCP Act, and signing it while intending to use the money for personal or domestic purposes is not a paperwork slip — it changes what the loan legally is. If any part of what you need the money for is personal, say so on the call and we will tell you straight away whether we can help.

Reviewed by Catriona Anderson, General Manager