At one point or the other as a self-employed person or a small business owner, you might be interested in getting a loan or you’d like to see what kind of mortgages are available to you. The only problem is the documentation required are not available and that might eliminate the chance of acquiring the loan.
Low doc loans offer a great relief for these kind of people, as long as you have the required assets and a steady income, this loan can be accessed. For a self-employed individual or business to get this loan, the applicant must declare the income the business generates, this is the major reason why this kind of loan is suitable for business owners.
Why lenders require documentation
The reason lenders require a ton of documentation is because in most instances they lend investor’s money. Hence, they need to make sure everything is in order, with minimal risk and they’ll make sure they can recover the investor’s money in case of a default. If you have bad credit it may be difficult to get a loan and you may need to visit The Finance Professionals to help you get a loan with bad credit, be sure to visit their site.
Lenders will look at statistics like the individual or company’s performance in the past which will give them an insight into what their future earnings will be like. Once these documents show cash flow that has the ability to support a loan, then they give it, if not they decline.
Types of Low Doc Loans
Low Doc Private Loans: this loan is mostly offered by private businesses to individuals and small businesses offering bearable rates and terms that won’t stifle the individual. They offer better payment flexibility than traditional banking institutions. Basically, the documents they require are your banks statements, a minimum of two years tax return and a debt schedule.
Low Doc Asset Based Loans: personal or business assets are used as collateral to fund this kind of loan. Assets that can be used are commercial properties, personal properties, business equipment and machinery. Documents needed for ABL are straightforward, after the application is the appraisal, after which you submit your financials.
Low-Doc Commercial Real Estate Mortgages: here loans are gotten without proving income, tax returns and various other documents. It can be difficult to find low doc loans so it's important to speak to a financial professional for help and advice.
- Low Doc ACH Cash Advances: this loan is suitable for individuals or businesses with bad credit in need of quick funds. they don’t have the documents conventional financial institutions require neither do they have the profitability. Cash advance isn’t considered a loan, what this means is that the businesses future receivables have been sold to a third party so they can have access to funds they’ll be receiving in future. The lender is paid a fixed amount daily from transactions of the business through an Automated Clearing House. The documents required for this loan are; the application and bank statements for six months.
There are several types of low doc business loans available so it's very likely you will need professional advice when obtaining a low doc loan to ensure you scout the best rates, fees and terms. If you aren’t sure of the kind of service you’re getting don’t hesitate to seek the help of a specialist, it will go a long way in making this process stress free.