| mercial borrowers have unique needs. The money | | | | there is higher risk for the lender, the cost for |
| they borrow and invest must fit into the big picture of | | | | borrowing goes up. |
| the strategic plan. Sometimes that means traditional | | | | In addition to higher interest rates, low doc commercial |
| financing works just fine. Other times it means that | | | | loans can carry higher fees than regular loans. If they |
| they need to look for alternative ways to finance in | | | | fit with the business plan they can still be a very good |
| order to raise capital. One tool in the arsenal is low doc | | | | deal for the company borrowing the money. They can |
| commercial financing. This type of financing allows the | | | | be processed quickly without the burden of additional |
| company to borrow based on the value of the | | | | paperwork. This level of convenience and speed can |
| property or equipment being financed rather than | | | | be extremely useful in the business world. Particularly if |
| based on the income of the company. These types of | | | | completing a deal depends on it. |
| loans are particularly popular for financing commercial | | | | So what are the hazards of low doc commercial |
| income generating property. They are also often used | | | | loans? In reality there is no more risk to the company |
| for financing heavy equipment. | | | | borrowing in using low doc commercial loans than |
| Low doc commercial loans are typically based on | | | | there is in taking on any other kind of debt. Of course |
| what is referred to as the LVR or Loan to Value | | | | you want to do your homework to make sure you are |
| Ratio. This is the amount that is lent relative to the | | | | getting the best possible deal and that the bank or |
| value of the property. For example, if a business | | | | lending company is working with your best interest at |
| wanted to borrow $250,000 and the bank required a | | | | heart. But in terms of the nature of the type of loan, it |
| debt to loan ratio of 75%, the borrower would be able | | | | really is no different than conventional financing. |
| to finance approximately $187,000 or 75% of the value | | | | Low doc commercial loans are available for the full |
| of the property. | | | | spectrum of business financing. Whether you are trying |
| It is easy to understand why a business would be | | | | to finance a commercial property, raise capital for |
| interested in undertaking low doc commercial loans. But | | | | property, plant, or equipment, or simply need a bridging |
| what about the bank? Why would they be interested | | | | loan, the chances are you can find a low doc |
| in making this kind of arrangement? The answer | | | | commercial loan that fits the bill. You should consult |
| isn’t really surprising. The bank or lending | | | | your lenders to see if they have a loan package that |
| institution makes money off the loan. Low doc | | | | will work for you. If not, a simple Internet search will find |
| commercial loans typically carry higher interest rates | | | | you a number of reputable lenders in your area that |
| than traditional loans. This is because they are | | | | will be happy to work with you to create a low doc |
| considered to be higher risk. That doesn’t mean | | | | commercial loan that works for your business. |
| they aren’t a good deal, just that whenever | | | | |