As of June 2023, there are approximately 2.5 million SMEs in Australia, representing a significant portion of the business landscape.
These SMEs operate across a wide range of industries, including retail, hospitality, construction, contractors and professional services.
Based on recent data 98% of Australian businesses are small businesses. The vast majority (92%) of these businesses have a turnover of less than $2 million.
One of the hurdles in obtaining finance for self-employed is providing consistent two years tax returns, this can be near impossible task for a lot of businesses, especially if your business is in the growth stage or your accountant has taken advantage of some legit tax minimisation strategies such as instant asset write offs, depreciation, trust distribution. This is where an understanding and creative mortgage brokers like us can help!
We can access low-doc and full doc products from more than 45 lenders in Australia and overseas. Let us help you match your business and personal needs to the correct lender.
Self employed/ ABN contractors – Standard Full docs loans
Full doc specifications
| Max LVR | 98% |
| Interest rate | Low- standard rate + negotiable |
| Min ABN period | 24 months generally. But can accept 6-18 month for certain industry. |
| Required Documentations | 1 year’s tax returns OR 2 years tax returns |
| LMI | Payable once loan is over 80% LVR No LMI available up to 95% for certain industries. |
| Advantages | Discounted interest rate High LVR Discount on LMI Fast approval - 24 hour turn around available |
| Disadvantages | Min 18–24-month ABN and need to see minimum one full year’s tax returns. |
| Case study - Nov 2022 | Mr Wu and Mrs Bensen own a local café and have been operating for three years under a partnership structure. They made a net profit of $50,000 in 2021 and $92,000 in 2022. They approached their bank to apply for their first home loan of $423,000. Loan: $423,000 LVR: 90% Bank: Rejected the application due to serviceability concerns - they could not afford the loan according to the branch staff. Shape Home Loans Result: Using the same file, we were able to get the loan approved with the SAME BANK, as we were able to explain for the increase credit card debt, for business cash flow and to obtain funds as a deposit toward their dream home. Due to the nature of their business, they were not able to provide any suitable tax returns or BAS. Their past tax return was extremely low due to Covid and welcoming their newborn. However this year their income has gone back up but the tax year is not yet due and tax returns not yet completed. Result: Loan went unconditional after one week. Property value: $1,200,000 Current Loan: $450,000 with a big 4 bank. LVR: 37% Required: $360,000 cash to fund business, pay down some debt and for deposit towards next property. Bank: Big 4 bank was not able to assist, as they required two years of stable tax returns with net income high enough for servicing. Shape Home Loans result: Loan of $450,000 refinanced with $360,000 cash provided on settlement - enough to fund business, pay down some debt and for deposit towards next property. All done with an accountant’s letter to confirm their income. The rate was higher than their current bank’s loan, by an extra +0.70% with a smaller non-bank lender. Result: Loan went unconditional after one week. |
Self employed/ ABN contractors – Low/ Alt doc loans.
Low doc specifications
| Max LVR | Generally 80% - can go up to 85% on a case-by-case basis. |
| Indicative interest rate | Medium - around +0.50% to 1.30% higher than your standard loan. Negotiable depending on the amount of proof and documentation you can provide. |
| Min ABN period | Min 1 month acceptable. Industry standard is min 12-24 months. |
| Required Documentations ( ONE only) Any one, but if you can provide two, the rate can be cheaper and LVR higher. | Accountants’ letter only OR 6 months trading bank statements OR 6 months BAS/GST statements |
| LMI | Payable once loan is over 70-75% LVR Some lenders will waive the LMI requirement and instead charge a one-off risk fee. Some lenders do offer LMI waiver up to 80% LVR on a case-by-case basis. |
| Advantages | • Flexible range of documentation can be used to show income. • Does not need to fit the LMI policy - risk fee. • Ability to swap to a full doc loan and rate once two years’ tax returns can be provided. • Tax returns NOT required. |
| Disadvantages | • LVR is reduced. • Rates are generally higher than standard rates. |
| Case study - January 2023 | Mr Simon Mason is a self-employed handyman and plumber with his own ABN. His wife helps with the business sometimes but is primarily a stay-at-home mum to their two young kids. They own two properties that have gone up in value. They want to release some equity to pay down business debt, credit card debt, for business cash flow and to obtain funds as a deposit toward their dream home. Due to the nature of their business, they were not able to provide any suitable tax returns or BAS. Their past tax return was extremely low due to Covid and welcoming their newborn. However this year their income has gone back up but the tax year is not yet due and tax returns not yet completed. Property value: $1,200,000 Current Loan: $450,000 with a big 4 bank. LVR: 37% Required: $360,000 cash to fund business, pay down some debt and for deposit towards next property. Bank: Big 4 bank was not able to assist, as they required two years of stable tax returns with net income high enough for servicing. Shape Home Loans result: Loan of $450,000 refinanced with $360,000 cash provided on settlement - enough to fund business, pay down some debt and for deposit towards next property. All done with an accountant’s letter to confirm their income. The rate was higher than their current bank’s loan, by an extra +0.70% with a smaller non-bank lender. Result: Loan went unconditional after one week.. |
| Case study - April 2022 | Mr Jason Bucker used to work for Telstra as a project manager on a salary package of $110,000 PA. However, one year ago, an opportunity came up with his recruiter which allowed Jason to become a contractor in the same role, working for Telstra part time and for another company on the side. His earnings were expected to be over $160,000 Per year – paying a daily rate via his ABN. He also utilised the expert advice of his accountant to set up a company for this contracting role to save on tax. Jason made an offer to buy his first Investment property using his family trust. His ABN and company was only active for 5 months. Loan: $525,000 LVR: 80% Bank: He approached three banks and they all rejected his loan due to a lack of documentation, inconsistent income, ABN active for less than two years and failure to provide two years of tax returns for his company. Shape Home Loans Result: With a bit of creativity and risk mitigation, we presented the file to a smaller lender, providing three months of trading statements and a letter from Jason's accountant to confirm his $160,000 income. We were able to get this loan approved, with no LMI (risk fee applied). Rate was 1% more expensive then a standard loan due to this short ABN ( less than 24 month). Results: Loan was accepted within six working days. |
Lease doc loans, no doc loans – commercial
This is a hassle-free loan for investors who is looking at purchasing a commercial property with a current lease in place. There’s no need to provide any documentation to prove your income if the rental income from the commercial property is sufficient to service the loan. So this means It must have a current suitable lease in place.
The property generally needs to be bought under a company set up to be accepted by banks.
Even though it’s called a no doc loan, the standard 100-point ID, liability statement and asset still need to be provided.
No doc/Lease doc specifications
| Max LVR | 60% - can go to 70% on case-by-case basis |
| Indicative interest rate | High, generally 2-3% more than your standard commercial rate. |
| Min ABN period | 1 day |
| Required Documentations | Standard ID and tenancy agreement to show rental income. |
| LMI | No LMI; Max LVR is 60% |
| Advantages | • No documentation required for income • Quick and dependent on the rental income only from the security property provides. • No documentation required for income • Quick and dependent on the rental income only from the security property provides. |
| Disadvantages | • Commercial properties (can accept block of residential unit on a case-by-case basis) • No construction. • Low LVR. • Must have a good credit file. • Term of the loan depends on the tenancy agreement term/period. |
| Case study - Nov 2021 | A retired property investor wanted to buy a commercial property, but for simplicity, they wanted a hassle-free no doc loan where they don't need to provide any tax returns or any income proof, beside the lease from the security property. Loan: $580,000 LVR: 60% Shape Home Loans Result: With a bit of risk mitigation and the fact the rent from the property would service the loan, we were able to source a reasonable loan that suited the client. Results: The loan was accepted within 24 hours, pending valuation. The rate was 2.20% higher than the standard commercial rate. Note: Three years later, we were able to refinance this same loan out to a normal bank using Two year’s tax return and a full servicing check. The rate was the standard interest rate. |