For people who work for themselves being able to obtain finance to buy a home, grow their business or purchase another asset can be a very challenging exercise. For a lot of self-employed there is a delicate balance between showing the Bank enough income to be able to repay a loan and claiming as many expenses against their income to reduce the amount of tax they pay.

Lenders also deem self-employed applications to potentially represent a higher risk as their income is not as predictable as someone in stable employment with a consistent income stream. It may also be difficult for some self-employed applicants to produce the financial information to satisfy a lender’s requirements.

With the changing nature of the employment market seeing more people opting to work for themselves by either starting a new business or contracting their services to another party, lending money to the self-employed is also changing. New providers in the lending market are trying to make it easier for self-employed applicants to access credit. Outlined below are some of the options available for those self-employed people who may fall outside the traditional lending options provided.


Low Documentation (Low Docloans are available for potential borrowers who are self-employed and don’t have access to the documents required to obtain a traditional mortgage. Usually borrowers cannot provide financial statements and tax returns to verify their income, so the lenders rely on other documentation provided by the applicant to determine whether they can afford to borrow the amount requested. The applicant would provide a declaration stating their level of income which would be supported by other forms of verification. This includes lodged BAS, trading account statements or a letter from the accountant for the business confirming the income declared is accurate.

The level of information required may vary between providers, and these types of loans are available for owner-occupied, investment and commercial properties.

These loans usually have a slightly higher interest rate than standard loans where full documentation has been provided, and not all lenders provide this option as part of their suite of products. The amount of property equity you would need to have to secure this type of loan will also be greater than a standard loan. But, if your circumstances mean you don’t fit the traditional type of borrower, this can be a good option to consider, particularly for Home Lending.


Cash-flow lending is usually a short-term loan that self-employed applicants might use for any business purpose. This can mean covering a temporary cash-flow shortfall, investing in new equipment or purchasing another business. The loan amounts are small, in most cases less than $100k, and in a lot of cases no security is required.

Where traditional business lending requires the applicant to provide two years of financials and tax returns, cash-flow lending looks at things differently. The revenue performance of the business is used to determine the eligibility to borrow.

The cost of these loans can be quite high, above 10% per annum before you factor in fees and charges, as these are primarily unsecured loans so the risk to the lender is higher. But cash-flow lending is also one of the fastest ways to inject funds into a business. Some of the providers suggest that they can have funds available within 48 hours of receiving an application, and the number of providers in this market is growing, even including some of the major Banks who have developed a product to cater for these types of requests.

Where a self-employed applicant can meet the requirements to obtain finance through traditional means then usually this is a less costly approach to take, although potentially more inconvenient. Lenders are risk-averse businesses so the more information a self-employed applicant can provide to verify their income is stable and secure the better. If, however you are in a situation where that is not possible, at least you know there are options available.

If you would like to know any more about these products and whether they may be a suitable option please call me at SHL Finance on 0478 021 757, or come in and see us at 2/23 Ringwood Street Ringwood.

Reece Droscher

Managing Director of SHL Finance Pty Ltd

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