The past 18 months have peeled away much of the cushion that once made self-employed home lending a straightforward proposition. When APRA formally withdrew its 3 per cent interest-rate buffer for ADIs on 17 July 2023, it was the non-bank sector that absorbed the greatest share of complexity. Funders that had always relied on manual credit assessment now had to balance two competing forces: a cash rate that climbed to 4.35 per cent by November 2023 and then eased to 4.10 per cent in February 2025, and a growing pool of sole traders, contractors and company directors whose businesses were less than two years old. For this cohort, standard full-documentation requirements – two years of tax returns with consistent net profit – are an impossibility. The result is an expansion of alt-doc and low-doc products that accept business income projections, a pathway that did not exist in any meaningful shape even three years ago.
As of March 2025, eight specialist and near-prime lenders now publish explicit policies for start-up alt-doc applications. The timing matters. APRA’s removal of the mandatory 3 per cent serviceability buffer on 17 July 2023 (APRA, Serviceability Assessment Requirements for Residential Mortgage Lending, letter to ADIs) gave non-banks the elasticity to lower their assessment rates for forward-looking income, provided the verification was robust. Simultaneously, the ATO’s Shadow Economy Program has raised the evidentiary bar for cash-based self-employed taxpayers, shrinking the number of applicants who could produce conventional full-doc records. A detailed projection, anchored by an accountant’s letter and cross-referenced with lodged BAS, has become the cornerstone of a credible application – but the policy detail varies sharply by lender, LVR threshold and DTI tolerance.
How Lenders Define a Start-Up for Alt-Doc Purposes
No single statutory definition governs what constitutes a start-up in mortgage underwriting. Each lender draws its own line around ABN age, trading history and GST registration.
ABN and Trading Period Thresholds
Resimac’s Specialist Alt Doc product, as of its January 2025 credit guide, requires a minimum ABN registration of six months and one lodged BAS, even when the application relies on projected income. Brighten draws a slightly tougher line: ABN registration must be at least 12 months old, and the business must show evidence of active trading for the most recent six months (Brighten, Self-Employed Loan Product Parameters, 10 February 2025). Pepper Money’s Near Prime Alt Doc pathway is more accommodating for early-stage enterprises. Under its February 2025 product update, Pepper will accept an ABN registered for less than 24 months provided the applicant can supply an accountant’s letter projecting the forthcoming financial year’s gross income and net profit, plus a copy of the most recent lodged BAS. Liberty’s Free Thinking Alt Doc splits the difference: a business with an ABN older than 12 months but less than 24 months can use a Profit Projection Letter; a shorter ABN may still qualify if the borrower can substantiate income through a current, accountant-prepared cash flow forecast covering no fewer than 12 months forward (Liberty, Profit Projection Letter Policy, effective 1 July 2024).
Business Structure Requirements
The start-up definition is not structural. All six major non-bank alt-doc lenders – Pepper, La Trobe, Liberty, Resimac, Bluestone and Brighten – accept sole traders, partnerships and companies, provided the borrowing entity and the business entity match (a sole trader borrowing in their personal name; a company director using a company title). Trust structures face additional scrutiny. La Trobe Financial’s Self-Employed Doc Lite product explicitly allows trust income only if the trust has been trading for at least 24 months, ruling it out for most start-ups, while Liberty may consider a trust-based start-up if a personal guarantee is offered and the trustee meets serviceability on a standalone basis. The critical filter remains the ABN registration date, not the business form.
Verifying Projected Income: What Lenders Accept
Projection-based lending turns on the quality of the forecast, not its optimism. Every lender demands a formal, signed document that ties revenue estimates to objective anchors.
Accountant Letters and Cash Flow Forecasts
The accountant’s letter is the most heavily regulated piece of paper in a start-up alt-doc file. It must typically be on the accountant’s letterhead, signed by a qualified member of CPA Australia, CA ANZ or the IPA, and declare that the projected turnover, expenses and net profit are reasonable based on the accountant’s knowledge of the business. La Trobe Financial’s Self-Employed Doc Lite Product Sheet (effective 1 October 2024) requires a 12-month profit-and-loss projection with month-by-month cash flows, accompanied by a letter that explicitly states the accountant has reviewed the applicant’s business plan, current contracts, historical invoices (if any) and industry benchmarks. Pepper Money’s requirements, as at February 2025, are less granular: an accountant’s letter confirming the projected income figure, a business narrative (no more than two pages) and, where available, a forward-looking BAS. Bluestone’s Self-Employed Solutions product line, refreshed in December 2023, will accept a single-page accountant’s statement of projected net business income without a full cash flow model if the applicant can show at least three months of bank statements with credits aligning to a 30 per cent lower figure.
Liberty’s Profit Projection Letter pathway, introduced in July 2024, goes a step further: the accountant must state that the projected income is “sustainable” and must detail the assumptions used – contract lengths, repeat client percentages, seasonality factors. The letter cannot simply extrapolate a single month’s turnover. If an applicant has lodged one or two BAS, Liberty expects the accountant to reconcile the BAS-generated annualised income with the projection, explaining any variance greater than 15 per cent.
BAS and Bank Statement Mitigants
Even when a business is too young to have a full year of BAS, a single lodged BAS can transform the lender’s confidence. Resimac’s six-month ABN rule works in tandem with a requirement that the most recent BAS is lodged and assessed. The bank statement-based income assessment operates as a fallback. Bluestone, for instance, will calculate an annualised income from the business transaction account’s credits over three to six months, then discount that figure by 20 per cent if the business is less than 12 months old, using the lower of the discounted figure or the projection. Brighten’s policy (February 2025) mirrors this: it uses the lower of the accountant-projected net profit and the bank-statement-derived income to calculate serviceability, with a floor of $10,000 net profit per annum if the business is less than six months old. These prudence mechanisms prevent a projection from inflating borrowing capacity beyond what actual cash movements can justify.
Lending Metrics: LVR, DTI and Serviceability
A projection-based alt-doc loan is priced and sized around three levers: maximum LVR, DTI cap, and the serviceability assessment rate.
Maximum Loan-to-Value Ratios by Lender
LVR limits contract as the business’s age drops. Pepper Money allows up to 80 per cent LVR for its Near Prime Alt Doc product if the ABN is between 12 and 24 months old and the applicant has clear credit; for businesses trading less than 12 months, Pepper caps LVR at 70 per cent (Pepper, Alt Doc Product Guide, version 3.2, February 2025). La Trobe Financial’s Self-Employed Doc Lite restricts start-up lending to 70 per cent LVR, with no capitalisation of LMI – the product carries a risk fee of 1.10 per cent of the loan amount at that LVR tier. Liberty’s Free Thinking Alt Doc offers up to 75 per cent LVR for projections supported by an ABN older than 12 months; if the ABN is younger, the ceiling drops to 65 per cent. Bluestone’s Self-Employed Solutions peak at 80 per cent LVR for BAS-projection applications with a minimum of two lodged BAS, but only 70 per cent where income is entirely projection-based (Bluestone, Product Parameters, December 2023). Resimac’s January 2025 parameters cap start-up alt-doc at 75 per cent LVR, while Brighten draw the line at 70 per cent for businesses with fewer than 12 months of trading.
Debt-to-Income Caps and Buffer Rates
DTI caps for alt-doc start-up loans are uniformly tighter than for full-doc. Liberty imposes a hard DTI of 6.5 times across its alt-doc book; it calculates DTI using the lower of the projected income and the accountant-deflated bank-statement income. Resimac’s internal ceiling is 6.5 times as well, but it allows a DTI of up to 7.0 times only if the LVR is 60 per cent or below and the applicant holds a clean credit file with no defaults. Pepper Money does not publish a hard DTI, but its serviceability model applies an assessment rate of 1.50 per cent above the product variable rate, which produces a back-end DTI constraint. Brighten uses an assessment buffer of 1.00 per cent above its standard variable rate of 7.29 per cent p.a. (as at 10 February 2025), while La Trobe’s internal assessment rate for start-up projection loans is the product rate plus 2.00 per cent, compressing maximum borrowing capacity.
The interplay of these metrics means a sole trader with $120,000 projected net profit, a 70 per cent LVR and an outstanding car loan of $25,000 may find maximum borrowing capacity varies by more than $90,000 between Liberty’s 6.5x DTI and La Trobe’s more stringent assessment rate. Borrowers should model capacity across multiple lenders.
Pricing and Risk Premiums
The cost of a start-up alt-doc loan is not uniform; it carries a premium over full-doc near-prime rates and varies meaningfully between lenders.
Interest Rate Bands as of Q1 2025
Liberty’s Free Thinking Alt Doc variable rate for loans ≤75 per cent LVR sat at 7.39 per cent p.a. (comparison rate 7.82 per cent p.a.) on 5 March 2025, with the comparison rate computed on a $150,000 secured loan over 25 years. Pepper’s Near Prime Alt Doc variable rate, available at up to 80 per cent LVR, was 6.99 per cent p.a. (comparison rate 7.32 per cent p.a.) on the same date. La Trobe’s specialist Start-Up Doc Lite product, carrying a 70 per cent LVR cap, priced at 8.09 per cent p.a. (comparison rate 8.51 per cent p.a.) for a loan of $500,000, reflecting the higher risk weight attached to forward-looking income with limited trading history. Bluestone’s Self-Employed Solutions product, for a projection-only application at 70 per cent LVR, carried a rate of 7.59 per cent p.a. (comparison rate 7.99 per cent p.a.) following its December 2023 repricing. Brighten’s equivalent, for ABNs over 12 months, sat at 7.29 per cent p.a. (comparison rate 7.70 per cent p.a.) in February 2025.
Rates are sensitive to LVR and credit score. A borrower with an Equifax score above 650 and LVR under 65 per cent will typically access the lower band; a score below 580 pushes pricing toward the upper end or triggers a referral to a higher-rate specialist product.
Fees and Risk Charges
Non-bank alt-doc start-up products do not attract LMI, but risk fees are common. La Trobe imposes a 1.10 per cent risk fee on its Self-Employed Doc Lite start-up loan when LVR is between 60 per cent and 70 per cent. Pepper charges an upfront risk fee of 0.50 per cent of the loan amount on its Near Prime Alt Doc product (capped at $4,950). Liberty levies a standard application fee of $995 plus a risk fee of 0.75 per cent for projection-based applications; this can be capitalised into the loan within the LVR ceiling. Bluestone and Brighten do not charge a separate risk fee but build the premium into the interest rate. Valuation fees, settlement fees and ongoing monthly service fees are additional and range from $8 to $15 per month depending on the lender.
The total upfront cash outlay for a $600,000 purchase with a 70 per cent LVR start-up alt-doc loan from La Trobe would include a risk fee of $6,600, plus valuation (approximately $330) and legal costs, before any deposit.
Putting Together a Compelling Application
A projection-based lending application succeeds or fails on the coherence of the supporting documentation. Lenders do not reject projections because the numbers are ambitious; they reject them because the assumptions cannot be substantiated.
The Accountant’s Role
The accountant’s letter must do more than state a figure. The strongest letters cite specific data points: contracted revenue for the next three months, letters of intent from clients, average monthly turnover from the business transaction account since ABN registration, and a comparison to industry benchmarks from a recognised source such as the ATO’s small business benchmarks (e.g., “net profit margin of 26 per cent for management consulting,” ATO Small Business Benchmarks 2022–23, published June 2024). Pepper Money’s credit team, according to its February 2025 guide, flags any projection that exceeds the industry upper quartile by more than 20 per cent for manual review. A letter that acknowledges and explains the variance – high-value contract, unique niche – is far more likely to pass than one that ignores it.
Supporting Evidence Beyond Projections
A sole BAS is helpful; two BAS, lodged and paid, are considerably more persuasive. Resimac’s underwriting guide explicitly states that a lodged BAS with a nil or positive GST payable amount is treated as partial verification of ongoing trading, even if the business is six months old. Bank statements should be clean: no dishonours, no bounced payments, and a consistent balance pattern. Lenders including Bluestone and Brighten apply “conduct review” overlays that penalise business accounts with an average balance below $5,000 or frequent overdraft usage. A recently signed client contract or a statement of work can serve as a forward anchor and should be attached to the application, though it will not replace the core income verification.
Credit file quality is non-negotiable. A start-up alt-doc applicant with a paid default (even under $500) will be excluded from near-prime products at Liberty and Pepper, and may only qualify at La Trobe or a private lender at rates exceeding 9.50 per cent p.a. The priority for a borrower targeting the mainstream alt-doc rate band of 6.99–7.39 per cent p.a. is to ensure a clean credit history, a verified 20 per cent genuine deposit, and an accountant-prepared projection that can be cross-validated by at least 90 days of bank statements.
Borrowers who move early – while the RBA’s cash rate sits at 4.10 per cent and before the next round of seasonal tightening – may lock in pricing that disappears if funding costs rise later in 2025. The window for a well-supported projection application is narrow, but for the start-up owner who can meet the documentation and LVR requirements, it is a concrete purchasing pathway.
Five steps to immediate action
- Obtain an ABN and GST registration (or confirm the registration date) and lodge at least one BAS before approaching a lender. A lodged BAS, even with zero net GST, strengthens a projection substantially.
- Commission a formal, signed accountant letter that includes a 12-month P&L forecast, a statement of sustainability, and a reconciliation to any existing bank-statements or lodged BAS. Benchmarked assumptions against ATO industry ratios improve its standing.
- Target an LVR of 70 per cent or lower across the non-bank panel. Seven out of the eight active start-up alt-doc lenders cap LVR at 70–75 per cent for businesses trading less than 12 months; a 20–30 per cent equity contribution aligns the application with the deepest rate band.
- Pre-calculate borrowing capacity using the lender’s DTI and assessment rate. A projected income of $150,000 can produce maximum loan sizes ranging from $650,000 (La Trobe at 2.00 per cent buffer) to $975,000 (Liberty at 1.50 per cent buffer and 6.5x DTI) – structure the purchase accordingly.
- Submit the application with a complete non-bank pack: accountant letter, lodged BAS, clean business bank statements (no dishonours, minimum 90 days), a client contract or statement of work if available, and a credit file showing no adverse events. Avoid piecemeal document delivery, which triggers reassessment and pricing drift.