According to the Australian Bureau of Statistics, nearly 12,250,000 people are currently employed in Australia as of August 2017 (http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0).
Out of that number, in excess of 2,000,000 are self employed and can be split almost equally between one man shows and self employed people employing other people. In total, nearly 5,000,000 are employed by small businesses in Australia.
You would be forgiven for thinking that such a tremendous contribution to the nation’s private sector can only be achieved with unshakable support from all stakeholders but the truth could not be further away.
Aside from overwhelming red tape, complicated and biased employment and industrial laws, most small business owners have to battle everyday with very difficult access to finance. Whether seeking a loan to purchase a home or for business purpose, there is every chance that a business owner will be made to jump through hoops and loops, walk on fire and eventually beg on his knees before maybe be approved.
It’s somewhat ironic to think that someone who is employed by the same business owner, will be able to secure all sorts of finance by just providing 2 payslips issued by that very business. Go and figure that out!
I don’t go a week without seeing a client whose real income is not reflected in her last tax returns, which could have been lodged 18 months ago. I don’t go a week without hearing a client curse his accountant for their overzealous tax minimization. I don’t go a week without assisting a client who has simply not lodged their last tax return yet. All of these may well be in a position to comfortably afford the loan they are seeking and yet may have been declined by their main street lender, all because they don’t fit in the little traditional boxes and require a bit more common sense applied. The truth is that in the vast majority of cases, there are solutions available to these clients, they just did not know about them.
Low Doc loans are still very much on offer in Australia, even though the main banks have all but abandoned them post GFC. Self employed clients who can demonstrate their real income via either of these means:
- An income declaration form (2 pages) signed by their accountant OR
- Last 2 BAS statements OR
- Last 6 months of trading account statements
can secure just about any type of finance:
- Home loan (incl. construction loan, refinance, purchase, cash out)
- Commercial loan (i.e. purchase of office, warehouse, shop etc…)
- SMSF Loan
- Personal loan
- Cash flow finance
The catch, because there is a catch, is that both the rates and the fees are likely to be higher than what the bank would offer to the same business owner’s very employees. That is why it is important, post settlement, for low doc loans applicants to work in concert with their broker and accountant to restore their ability to qualify for full doc loans. Doing so will allow them to refinance the low doc loan promptly and secure the lowest rates on offer.
If you are self employed and needing some finance, give us a call on 1300 781 680 or send us a message.
*The information contained in this blog is general information only. No part of this blog is to be construed as a solicitation to buy or sell any security or financial product. The author, in preparing this blog, did not take into account the investment objectives, financial situation and particular needs of any particular person. Before acting on any information or advice in this document, you should consider the appropriateness of it (and any relevant product) having regard to your circumstances. You should also seek independent financial advice prior to acquiring a financial product.