The Low Doc is a guarantee program on loans that is available through the Small Business Administration (SBA). It provides a good way for a company to have a better chance at getting debt financing in value under $150,000. The low doc will also help the company save time in reducing the complications usually associated with getting a loan under $100,000, generally streamlining and making the process easier for the borrower.
Some lenders, whether banks or other financial institutions, are hesitant to provide small businesses with loan funding. Small businesses historically have a bad record, since most of them that are started end up failing. By getting a Low Doc loan the business will have the SBA’s backing, so that if it does end up defaulting on the loan the SBA will repay the lender a portion of the loan they extended to the business.
With the Low Doc the amount of the loan being guaranteed has to be under $150,000. If the business has any available assets these must be used as collateral (some businesses are still able to get a Low Doc without having any collateral though). Both the lender and the borrower fill out an application with some information and submit it to the SBA, which will then respond as to whether the borrower has been turned down or accepted. The interest rates on such a loan can either be fixed or variable, and they depend on a number of factors, as does the length of the loan’s term (usually 5-10 years though).
There are a few requirements for a Low Doc, but generally most small businesses and startups with good credit and reliability can qualify.
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