If you’re in a hurry for finance, an alt doc or low doc equipment loan might be an option for you.
Low Doc, Alt Doc and Full Doc Loans – What’s the Difference?
When you’re applying for an equipment loan, there are different types of finance options available to you depending on how long you’ve been in business, the size of the loan you are looking at getting and how much documentation you have ready to provide.
If you’ve been in business with an ABN and registered for GST for at least two years, you might be able to obtain low doc or alt doc equipment finance which means you only need to provide minimal documentation when applying for a loan. If you’re an established business seeking a large amount of equipment finance you will need to apply for a full doc loan. Here’s the different options explained including who is eligible and what is required.
- Low doc equipment finance
Who can apply?
Businesses who have had an ABN and have been registered for GST for at least two (2) years.
What is needed?
Director/s of the business to show they are homeowners with a previous credit history or provide a 20% deposit on the equipment purchase.
Very little documentation is usually required, just a driver’s license and an asset and liability statement.
2. Alt doc equipment finance
Who can apply?
Businesses who have had an ABN and have generally been registered for GST for at least two (2) years.
What is needed?
Documentation to prove income is required and interim figures can usually be used. This could be in the form of BAS statements, bank statements, an accountant’s letter or a profit and loss statement from accountancy software such as XERO or MYOB.
3. Full doc equipment finance
Who can apply?
New entities including businesses who have had an ABN for less than one (1) year will need to apply for a full doc loan. Bigger businesses who are applying for a larger loan, usually of $500K or more, will also need to apply for a full doc loan.
What is needed?
Full proof of income is required for a full doc loan including two years of full financials. This generally includes accountant prepared Profit and Loss statements, Balance Sheets, ATO portal information and copies of tax returns, a commitment schedule and an asset and liability statement.
In Summary
If you’re pushed for time and need access to finance quickly for an equipment purchase, a low doc or alt doc loan might be a good option for you. The above gives you an idea of the documentation usually required for these types of loans. Sometimes additional information may be requested in which case our brokers will liaise with you and the lender to work through what is required. Overall though, these types of loans can make seeking finance quicker and easier. Our brokers have access to a number of lenders that offer low doc and alt doc loans to finance equipment with the amount you can borrow varying from lender to lender but usually up to $250K.
If you’d like help with finance for your next purchase, have a chat to our Asset Team – they’ll be able to find the right loan that suits you and your business.