If you have been told you need two full financial years of trading before a lender will consider your business, you are not alone. It is one of the most common things we hear from business owners, and it stops a lot of good businesses from even applying when they actually have options. In this article we will explain where this idea comes from, what your real options are at different stages of business, and how alt doc and low doc lending can help when your paperwork does not tell the full story.
Where This Idea Comes From
It is not. There are lending pathways available well before you reach that two year mark, and there are also options for established businesses whose recent figures do not yet appear in their lodged tax returns.
Lending Options at Every Stage
For very new businesses that can show early trading activity and momentum.
Once you have a full year of trading behind you, more doors open.
Often a good bridge while you continue building toward two full years.
For businesses getting close to that two year mark, with strong recent performance to show for it.
Alt Doc and Low Doc: An Alternative Path
Alt doc and low doc options are simply an alternative way to verify income, and they can suit a range of businesses. Rather than relying purely on traditional documents like full financial statements or tax returns, these options can consider things like:
- Bank statements
- Accountant declarations
- Current year trading activity and cash flow trends
This can be useful for those 6 to 18 month businesses mentioned above, and it can also help long standing businesses whose current year of trade is well ahead of what is reflected in their last lodged tax return. In other words, if your business has grown strongly this year but that growth has not caught up with your paperwork yet, alt doc and low doc lending can help bridge that gap.
They will not suit every situation, and terms vary from lender to lender, but they are a good example of how lenders can look beyond a rigid set of paperwork to get a true picture of how a business is performing.
Practical Points to Keep in Mind
- Two financial years is ideal, but it is not the only pathway to finance.
- Startup timelines from 6 to 18 months exist for newer businesses.
- Alt doc and low doc options are an alternative form of income verification
- These options can also help established businesses whose current growth is not yet reflected in past tax returns.
- The right option depends on your individual circumstances, so it is worth discussing your situation directly.
So What Does This Mean for You?
Ready to Explore Your Options?
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