Can I get a commercial loan without much evidence of income?

Share your concerns & ideas about commercial property loans in Australia.
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Kafka
Posts: 47
Joined: Thu Jul 04, 2013 4:41 pm

Can I get a commercial loan without much evidence of income?

Post by Kafka »

Hello everyone,

I’m a professional wrestler and I love my job, but I can’t continue on this lifestyle forever. I have decided to start a wrestling dojo and training gym. I was thinking of buying a property in Brisbane but I don’t have all the evidence of my income, which is roughly $100,000 annually.

I’m not sure how to get a loan. Can anyone explain to me what I can do?

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Otto Dargan
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Re: Can I get a commercial loan without much evidence of inc

Post by Otto Dargan »

Hello Kafka. Welcome to the forums.

Although you do not have all the documents required by standard lenders, you may still be able to get a low doc commercial loan.

Through a low doc commercial loan, you may be allowed to borrow up to:
  • 80% of the purchase price if you are buying a commercial property.
  • 65% of the purchase price with reduced interest rates if you are buying a commercial property.
  • 80% of the purchase price if you are refinancing a commercial property.
You may even be able to borrow up to 100% of the value of residential properties that you own.

A low doc loan may not require tax return statements or financial statements. However, some sort of income evidence is still required. In most cases, you may need to have a registered Australian Business Number (ABN). You also need to sign an income declaration which confirms your current income.

You may also need to provide additional documents such as:
  • An accountant’s letter.
  • Business Activity Statements (BAS).
  • Bank account statements.
  • A copy of your rental history.
  • A copy of the commercial lease agreement.
Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Kafka
Posts: 47
Joined: Thu Jul 04, 2013 4:41 pm

Re: Can I get a commercial loan without much evidence of inc

Post by Kafka »

Hello Otto,

I realise that there are low doc loans and full doc loans. Can you please explain to me if there are any other types and how they’re different? I’d also like to know if I could use profit forecasts to help my loan application get approved.

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Otto Dargan
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Can I get a commercial loan without much evidence of inc

Post by Otto Dargan »

Hi Kafka,

Loan types can be classified according to the documents that you can provide to prove your income. The main types of loans according to this classification are as follows:
  • Full doc loan - By providing evidence for your income through tax returns or payslips, you can get a full doc loan.
  • Low doc loan - This is usually taken out by those who cannot provide complete income evidence. Low doc loans have a higher interest rate than full doc loans.
  • Lease doc loan - In this type of loan, lenders rely on the strength of the rent income from the property used to secure the loan. This kind of loan is usually taken out when the rental income of the commercial property is higher than the interest. This is similar to low doc loan.
  • No doc loan - If a borrower has no evidence of income then a no doc loan may be the option for them. This type of loan is generally used as a last resort due to its higher interest rates.
If you use profit forecasts as an alternative form of income verification, you may be eligible for a full doc loan. This will allow you to borrow more as well as to get a lower interest rate than that on a low doc loan.

More information regarding this can be found on our website. You can also talk to one of our experts directly on 1300 889 743 or you can enquire online to see if you qualify for a loan or not.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Kafka
Posts: 47
Joined: Thu Jul 04, 2013 4:41 pm

Re: Can I get a commercial loan without much evidence of inc

Post by Kafka »

That was very informative, thank you. I want to cover all my bases and get approved for a commercial loan, which is why I will call you within the week. Thanks for your time and quick reply, Otto. Cheers.

Noori
Posts: 43
Joined: Thu Jul 25, 2013 7:01 pm

Re: Can I get a commercial loan without much evidence of inc

Post by Noori »

Hello Home Loan Experts Forum!

I was also thinking of getting a commercial loan to purchase a property in Norseman. I was researching low doc loans and found out that you may not require Business Activity Statements but an accountant’s letter could suffice. I want to know what an accountant’s letter should contain. Can anyone explain this to me?

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Otto Dargan
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Re: Can I get a commercial loan without much evidence of inc

Post by Otto Dargan »

Hi Noori,

An accountant’s letter may be accepted by some lenders as an alternative to Business Activity Statements (BAS). This declaration of your income must be signed by a fully qualified accountant confirming the legitimacy of your annual net income.

Generally, to be accepted, an accountant’s letter should:
  • Be on the accountant’s letterhead.
  • Show the accountant’s full details including Australian Business Number (ABN), address, and phone number.
  • Be signed and dated.
  • Specify how long the accountant has acted on behalf of the borrower.
  • State that the mentioned figure of annual gross income of the borrower is not an unreasonable estimation.
  • Include the taxable income of the borrower.
  • Include a disclaimer to protect the accountant.
Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Noori
Posts: 43
Joined: Thu Jul 25, 2013 7:01 pm

Re: Can I get a commercial loan without much evidence of inc

Post by Noori »

That was very helpful, Otto. I thank you for finding the time to reply to my question so soon. If I have any more queries, I’ll make sure to visit your website.

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