A low doc or no-doc loan is a mortgage/business loan requiring minimum documentation. These loans are offered to individuals who have a great credit score and decent/stable income but have no asset documents or high bank statements. Asset documentation and regular income with similar bank statements are necessary for approval from traditional loans. But, no-doc loans are flexible and don’t require more documentation.
This article will list everything you need to know about low doc loans.
What Are Low Doc Loans?
Every type of loan necessitates a certain amount of paperwork. To get the loan approved in traditional banks, you need to go through a lot of paperwork and prove your eligibility. Several banks ask for a perfect credit score, stable income, collateral, etc., but you need the minimum documentation and eligibility when you apply for a no-doc loan.
To obtain a low doc loan, you need a decent credit score and a stable income. Yes, you can borrow the loan with just these two things. The speed and ease of obtaining this loan make it popular among individuals and small businesses.
Who Can Benefit From Low Doc Loans?
The low doc loans are best for those who cannot borrow from the traditional banks because of the strict and hectic paperwork and eligibility criteria. No-doc loans are:
For those who can’t provide bank statements or asset statements
For self-employed consultants
For those with other sources of income (non-traditional professions)
What Are the Types of Loans You Can Get With Low Documentation Requirements?
Every type of loan requires some paperwork. If you are looking for the loans that require the least amount of paperwork, you can apply for the following.
Unsecured short-term business loans
These loans don’t need collateral like property or equipment. The process involves less paperwork. Unsecured loans are best for entrepreneurs looking for funds for small/medium businesses.
This is not exactly a loan, but it offers funds to businesses faster than the traditional banks and with minimum paperwork. Usually, you will receive 85% o 90% of your money upfront, and the rest will be provided after the invoice is paid. Invoice factoring lets B2B companies access funds quicker and with lesser documents.
By the name itself, you can understand this loan is for businesses that need funds to acquire pieces of equipment for their plants. You can expect less paperwork than what’s required for a term loan.
Business credit card
To get a small-business credit card, you need to provide several documents, but the requirement is way less than what is required for a standard business loan.
Merchant cash advances
This type of loan provides upfront funding. You can repay the loan amount with a portion of your credit or debit card sales. This loan also requires less paperwork and is approved quickly.
All these loans are approved within hours or a few days and require less paperwork.
It would help if you remembered that some of these financial institutions providing quick and easy loans charge higher interests, which is common for no-doc loans. When you are applying for the loan, analyse the interest rates and calculate the amount you will have to pay monthly and whether the loan amount is sufficient for your business or not.