Definition
A low doc loan is finance assessed with less documentation than a traditional loan. In place of lodged returns and audited accounts, the lender relies on substitutes like bank statements, recent BAS or a letter from your accountant. Low doc lending suits self-employed borrowers whose paperwork is behind or whose returns understate cash flow, but it usually costs more or allows lower loan-to-value ratios.
Low doc lending exists for business owners whose real trading is stronger than their paperwork shows, or whose paperwork has not caught up.
What lenders accept
Typical alternatives to full financials include several months of business bank statements, recent BAS lodgements, an accountant’s letter confirming income and a signed declaration from the borrower.
Who uses it
Sole traders, contractors, consultants and self-employed owners whose tax returns are late or whose legitimate deductions make taxable income look low compared with cash flow.
The trade-offs
Expect a higher price, lower maximum LVRs on property-secured loans, or both. Any declarations you sign must be accurate. Our low doc business loans review covers the details. To see what might be possible, make one enquiry.
Common questions
Is low doc the same as no doc?
No. Low doc still requires some evidence of income, such as bank statements or BAS. Genuine no doc lending is rare.
Are low doc loans more expensive?
Usually, since thinner paperwork means more uncertainty for the lender. Property security can narrow the difference.
Sources and further reading