From Jan 1 2011, banks have brought in guidelines to comply with the new National Consumer Credit Protection Act (NCCP). Lenders now require evidence that you are able to repay a loan. This means that low doc loans now generally need, either BAS statements, trading statements or an accountants letter, to show that the customer can service a loan.
Low Doc Loans are not dead! Low doc loans are still available, however, they now require more verification.
With the banks adopting more cautious lending policies it would appear the self employed, as the largest group of low doc loans borrowers, have been the hardest hit by both the GFC and NCCP. As with anything new it will take time to adjust, however, eventually small business owners will adapt to the new credit environment we are in.
