Low doc business loans have long been an alternative for people with low credit score and financial needs. Now, these loans with low-documentation do not limit to only one type. It’s safe to say that all loans can be taken with low-documentation.
In this article, we are mainly concerned with low doc business loans. As a consequence, this will be of high interest to entrepreneurs, be them beginners or already activating in a certain domain and market.
Let’s see, then, what low doc business loans are available for business owners who find themselves in dire straits.
What Are Low Doc Business Loans?
Usually, when you go to a lender’s office, you will need to provide a ton of documents about your business. Tax returns, revenues, cycles of sells, business plan, etc. When the entrepreneurs are self-employed, mustering up these documents can be next to impossible.
If the lender is a traditional one, i.e. a bank, that business owner will have little to no chance of getting the loan without the paperwork above. In this case, he/she shouldn’t despair. A couple of years ago, there was no such thing as a low doc loan, now there is.
There are many lenders that provide loans to self-employed people that cannot come up with the documents we’ve listed above. With all these, they may be required to present an income declaration.
Even though they won’t ask for anything else, they must make sure you can repay the money. If you’re tempted to get a low doc loan, make sure you won’t be robbed blind with incredibly high interest rates.
Where Can I Get Them?
There are numerous companies that give out low doc business loans on the Internet. In fact, simply Googling this keyword will provide a ton of results. If you opt for a company you find on the Internet, your request might be done over the phone.
Apart from these, low doc business loans can also be given by individual investors. They really don’t care about your lack of documents as long as you can pay the money back.
The good thing about investors is that they usually tailor the repayment plan in concordance with your needs and your cycle of sales (if any).
Are They Legal?
Of course. If they weren’t, they would have disappeared a long time ago. Banks, however, are not very keen on business loans with minimal paperwork because they’re not very trustworthy and they want as much information as possible.
If banks do not handle them, it does not mean that they are on the outside of legality. In fact, the representatives of some banks will recommend you to seek alternative forms of funding, like low-doc loans.
The Pros:
- You get the funding you need with little to no effort
- The process is quite fast, due to the fact that the screening is almost inexistent
- The sums that are handed over through these loans can be high
- Good repayment plans
- Can be given in as little as 24 hours from the moment the application was received by the lender
As you might expect, these loans are not all honey and milk. Just like any other loans, they are joined by a vast array of disadvantages.
The Cons:
- High interest rates – because the lender must make sure he/she is not going to lose money with you
- Additional fees + charges may be perceived from those who signed the contract
- The deposits for such a loan are usually higher
- May require collateral, which isn’t a good idea when you had to take a low doc loan in the first place
- The default period is usually shorter than the one you would have gotten with a loan from a bank
Types of Low Doc Business Loans
Any traditional loan has its low-documentation counterpart. You can try your luck at some local banks, but it’s less likely that you’ll be successful. First of all, banks are all for credit scores.
If you’re self-employed, you’ve probably never taken out a loan before, which means that your credit score will be pristine, but still not enough. Second of all, banks do not issue low-doc loans, so you may need to look elsewhere.
Concluding Remarks
Low doc business loans are truly of great help to self-employed people, but they usually come with many strings attached. That is why additional caution is recommended when dealing with lenders.
Whatever you do, just make sure you’ll be getting all the advantages and no disadvantages. That means, stay away from high interest rates and other fees.
For more on this topic, feel free to contact us for accurate information on all things financial and business related. Make an enquiry on our website today and get valuable advice on how, when and why you should get a low doc business loan.
