If you've started looking for a commercial property loan or business finance in Australia, you've probably come across terms like "low doc," "no doc," and "alt doc" and wondered what they actually mean for your borrowing options.
The short answer: they describe how much income verification a lender requires before approving your loan. The longer answer has a real impact on your loan size, interest rate, speed to approval, and which lenders will even consider your deal.
This guide breaks it all down, including how lenders work out how much they'll lend, and where Settled With Joe can help.
Why Documentation Type Matters in Commercial Finance
Commercial lending is assessed differently from a standard home loan. Lenders look at the borrower, the security, the business or tenant behind the income, and how the loan will be repaid or refinanced.
The way a borrower proves their financial position is a key part of that picture. Not every borrower has clean, up-to-date tax returns or two years of lodged business financials. Business owners, the self-employed, and investors with income flowing through trusts and companies often need lending solutions that reflect how they actually operate.
That's where the doc type comes in.
The Four Loan Types Explained
Full Doc
Full documentation is the standard benchmark. The borrower provides:
- •Two years of personal and/or business tax returns
- •Financial statements
- •ATO notices of assessment
- •Evidence of all income sources
Major banks operate primarily in full doc territory. The upside is access to the lowest interest rates and the highest LVRs available. The downside is the time involved in preparing documents and the rigidity of credit assessment. If your income is variable, trust-distributed, or structured through a holding entity, full doc can be difficult even when you're financially strong. It can also be a problem when tax returns are running behind, which is common for growing businesses.
Typical lenders: Big four banks, tier 1 non-banks
May suit: Established businesses with lodged financials, investors with clean income structures, well-leased commercial property
Low Doc
Low documentation loans are designed for self-employed borrowers and business owners who can't easily produce traditional financial evidence but can demonstrate their income through other means.
Instead of full tax returns, a low doc lender typically accepts:
- •A signed income declaration from the borrower
- •An accountant's letter confirming the declared income
- •Business Activity Statements (BAS) for the past 12 months
The lender is taking the borrower's word, supported by professional sign-off. This requires an accountant in the loop but removes the need for full lodged financials.
Low doc is the most common non-full doc option in Australian commercial lending and is available across a wide range of bank and non-bank lenders.
Typical lenders: Non-bank lenders, some tier 2 banks, specialist commercial lenders
May suit: Self-employed borrowers, small business owners buying their own premises, investors with complex income structures
Alt Doc
Alt doc, or alternative documentation, is often used interchangeably with low doc but has a specific meaning: the lender accepts alternative evidence of income rather than standard tax-based documents.
This might include:
- •Business bank statements (typically 6 to 12 months)
- •BAS statements
- •Accountant declarations
- •Lease agreements and rental income statements
The key difference from low doc is flexibility in what evidence is accepted. Some alt doc lenders don't require an accountant at all and will rely purely on bank statement analysis. This can speed up turnaround significantly.
Typical lenders: Specialist non-bank lenders, private lenders
May suit: Businesses with strong cash flow evident from bank statements but limited or out-of-date formal financial records
No Doc
No documentation means exactly that. The lender does not verify income at all. The loan is assessed entirely on the quality of the security and the strength of the exit.
For commercial finance, this means the lender is assessing:
- •The property being offered as security, including its location, use and condition
- •The valuation and the loan-to-value ratio (LVR)
- •The lease profile, if the property is tenanted
- •The exit strategy: sale, refinance, or repayment from another source
No doc loans carry trade-offs. Rates are higher, terms are usually shorter, and LVRs are typically lower than other loan types. Almost all no doc commercial lending sits with private or non-conforming lenders. Whether this type of facility is appropriate depends entirely on the borrower's situation, the security, and what other options are available.
Typical lenders: Private lenders, non-conforming lenders, tier 3 non-banks
May suit: Short-term bridging and settlement scenarios, time-critical deals, or complex situations where other lender options have been assessed and exhausted
At a Glance: Doc Type Comparison
| Loan Type | Income Verification | Indicative Max LVR | Speed | Best Lender Type |
|---|---|---|---|---|
| Full Doc | Full tax returns and financials | Up to 70 to 80% | Slower | Major banks, tier 1 non-banks |
| Low Doc | Self-declared income, accountant letter, BAS | Up to 70% | Moderate | Non-bank lenders, tier 2 |
| Alt Doc | Bank statements, BAS, or accountant declaration | Up to 70% | Fast | Specialist non-banks |
| No Doc | None | 60 to 65% | Fast to very fast | Private lenders, non-conforming |
LVRs are indicative only and vary by lender, property type, location and borrower profile.
How Lenders Actually Work Out How Much They'll Lend
This is where commercial finance differs significantly from standard home lending, and where a lot of borrowers get confused. Most commercial lenders size a loan using two tests, and the loan amount is whichever one comes out lower.
1. Loan-to-Value Ratio (LVR)
The LVR is the loan amount as a percentage of the security's value, as assessed by an independent valuer on the lender's panel. Commercial LVRs are generally lower than residential, because commercial property can take longer to sell and its value depends heavily on who occupies it.
A lender offering 65% LVR on a warehouse valued at $2M would lend up to $1.3M, leaving the borrower to contribute the balance plus costs.
The type of property matters. Standard offices, warehouses and retail shops in metro areas tend to attract the highest LVRs. Specialised assets, such as childcare centres, hotels or properties with a single-purpose fit-out, may attract lower LVRs or a narrower pool of lenders.
2. Serviceability
The second test is whether the loan can be repaid. For a full doc loan, this is based on tax returns and financials. For low doc and alt doc, it is based on declared income, BAS or bank statements.
For tenanted investment property, lenders also look at the interest cover ratio (ICR), which compares the net rent to the interest cost. Many lenders want the rent to cover the interest by a set margin before they'll approve the loan. A long lease to a strong tenant can support a bigger loan than a short lease or a vacant building.
The practical difference:
If a property is valued at $3M, a 65% LVR would allow a loan of up to $1.95M. But if the rent or the business income can only support $1.5M on the lender's servicing test, $1.5M is the most you'll be offered. Knowing which test is holding your loan back is often the key to finding a lender whose policy fits.
Interest-Only and Loan Terms: Why They Matter
Many commercial loans are offered on an interest-only basis for an initial period, which reduces repayments and can help with cash flow while a business grows or a property is leased up. Commercial loan terms are also generally shorter than residential, and some facilities are reviewed or need to be refinanced every few years.
Short-term private and bridging facilities sometimes use prepaid or capitalised interest, where interest is set aside from the loan or added to the balance rather than paid monthly. This can be useful when the loan is short and the exit is clear, such as a pending sale or refinance, but it adds to the total cost and should be weighed carefully.
Lender Types and Where Settled With Joe Operates
The Australian commercial lending market is tiered:
Major Banks (Big Four + Macquarie)
Full doc or very strong low doc. Higher LVRs. Lowest rates. Strict credit policy. Long turnaround times. Suitable for established businesses and investors with standard income structures and well-leased property.
Tier 2 Non-Bank Lenders
Full doc to low doc. Flexible on income evidence. Competitive rates. Good for borrowers who don't meet bank credit policy but have sound security and demonstrable financials.
Tier 3 Specialist and Non-Conforming Lenders
Low doc to alt doc. Willing to lend on more complex properties and income structures. Higher rates than tier 2 but wider credit appetite.
Private Lenders
No doc to low doc. Assess primarily on security and exit rather than borrower income. Faster approval and settlement timelines in many cases. Higher rates than other lender tiers. Private lending may be one option worth exploring for urgent deals, short-term bridging, or complex situations, but it is not the default recommendation and should always be considered alongside other available options.
A Note on Private and Non-Bank Lending
Private and non-bank lenders are a legitimate part of the Australian commercial finance market. For some borrowers in some situations, they may be worth exploring as part of a broader assessment of what is available.
They are not, however, the right solution for everyone. Higher rates, shorter loan terms, and lower maximum LVRs are real considerations that need to be weighed carefully against the alternatives. The goal is always to find the most appropriate option for each borrower's specific circumstances, not to default to any particular lender type. Where private funding is on the table, it is important to only consider highly reputable and trustworthy private lenders with a clear track record and transparent terms.
As a broker, Settled With Joe does not favour any lender or lender category. Our role is to understand your situation, assess what options may realistically be available across the full market, and help you make an informed decision from there.
What Doc Type May Be Relevant to Your Situation?
There is no single right answer. The appropriate doc type depends on a range of factors including:
- •Your income structure and ability to produce documentation
- •The type of property or asset being financed
- •The LVR required to make the deal work
- •Your timeline
- •How the loan will ultimately be repaid or refinanced
The doc type that a lender requires will also vary depending on which lenders are willing to engage with a specific deal. What works for one borrower may not work for another. The best outcome comes from assessing the full range of options available rather than assuming one path is appropriate before exploring all of them.
How Settled With Joe Can Help
Settled With Joe works across the full spectrum of commercial finance, from commercial property loans to business loans and short-term bridging. We do not favour any lender type. Our role is to assess your situation honestly and help identify what options may be available across the full market, whether that leads to a major bank, a non-bank lender, a private facility, or a combination.
We draw on a lender panel of 90+ bank, non-bank, and private lenders.
If you have a deal and want to understand what may be possible, speak to Settled With Joe.
