Cash Flow vs Profit

By: Aaron Robbins0 comments

In the words of the former independent Vice Chairman of Deloitte, “You will always need more capital than you think”.

Even successful businesses that are profitable in terms of their sales can still experience issues when it comes to cash flow.

Understanding the difference between cash flow vs profit is crucial to business success, which is why we’ve prepared the below guide on the differences between the two, and how short term caveat loans can help you access the capital you need, even as a successful Aussie business.

What’s the difference between Cash Flow and Profit?

Unless you’re a NFP (not-for-profit) charitable organisation, the aim of the business game is to earn profit, so it’s little wonder when we think of business success, many automatically think of profitability.

Profit refers to the amount of money that your business has left over after paying all of it’s expenses.

Being measured typically at the end of a financial year means that often profitable businesses are mistaken for being financially flush over the full 12 months.

Even businesses who make significant profits at the end of every financial year, can still experience periods over that 12 month period where cash is tight.

Which perfectly describes cash flow; the net flow of cash in and out of a business.

Having cash available to secure opportunities, pay large expenses, or even cover ATO payments can be a real challenge for businesses of all shapes and sizes, regardless of their profitability, unless they have sufficient movement of cash coming in, or capital at the ready.

That’s why we are excited to introduce you to caveat loans!

How short term caveat loans can help successful businesses

In order to be a profitable business, you’ve have to make a range of sound decisions over the course of your business’s operation.

Whether it’s hiring the right mix of employees, taking on the right clients, expanding at the right time, or taking risks that pay off, every business owner knows the without sufficient funding, your hands can feel tied to make the right decisions for your business’ prosperity.

A short term caveat loan can help!

Designed to help businesses over the short term, a caveat loan is a business loan that uses the equity in an owned property to provide instant capital that’s repaid usually within 12 months.

Caveat Loans Explained

For property owners who also run a business, caveat lending uses your real estate property to unlock equity by placing a legal caveat over the title of your property.

Loan Amount

Your loan amount really depends on the property value.

If you have sufficient equity, then you can have sufficient funding!

Regardless of whether you own the property, you can borrow up to 75% of the available equity in the security property.

Loan Term

A short term caveat loan through Diverse Funding Solution is usually for 12 months.

The benefit of accessing private funding though, is that we can extend out the loan term if you need.

As one of Australia’s leading private lenders, we’re happy to work with loan terms that support your small business.

Credit Checks

Another benefit of DFS being a private lender is that we do not rely on your credit history; we won’t run a credit check on you or your business as part of our caveat loan application process.

Businesses in Australia have experienced some tough times over the last few years.

We want to help you move forward, not look at your past.

This is why we don’t rely on your credit file, but instead work at sorting out affordable repayment schedules and an exit strategy.

Bad credit doesn’t need to be a barrier to accessing caveat loans.

Fast and easy approvals

Our loan process is what makes fast caveat loans fast!

We’re able to offer fast finance because we don’t get caught in the unnecessary red tape that other lenders do.

Our firm’s principal is an authorised credit representative, but that doesn’t mean we need to overcomplicate our application process like other lenders.

Our lending criteria are hassle-free and based on your ability to repay the loan, which is why we don’t look at a property valuation, revenue forecasts, your mortgage statement, or the documentation lenders traditionally assess.

Caveat loans settle faster than most other loan types, including bank loans and business loans — even a short term business loan from a traditional lender.

In fact, DFS can have your caveat loan approved in as little as 48 hours!

There is no pre-approval application process or need to go through a pre-approval at all — another benefit to accessing private lending.

Save Interest

When you get a caveat loan through DFS, you’re accessing the most competitive interest rates available of the loans in Australia — as low as 0.77% per month!

An incredibly low interest rate is just another one of the benefits to accessing a private lender such as DFS for your caveat loan.

Transparency is key with our team, which is why we don’t hide behind hidden fees or false promises.

Sticking to the regulations set by the Australian credit licence of our principal is perfectly balanced with offering business owners an affordable, efficient and reliable short term loan solution.

Available even with an existing mortgage

You can still access a caveat loan on your property even if it’s currently got an existing mortgage, home loan or second mortgage on it.

A legal caveat sits behind any mortgage on the property and is why we don’t need to seek the approval of any existing mortgage lender before registering our interest on the property.

It’s also what helps to expedite our application from start to finish, and is why we can offer such fast finance.

How are caveat loans secured?

Caveat loans work by securing the lender’s interest in your property by placing a legal caveat on the title deed of the property.

This is a fundamental difference between caveat loans and second mortgages.

It’s also why we cannot accept overseas properties as security for a caveat loan.

What fast caveat loans are used for

Business owners across Australia use caveat loans when they need a loan for a range of business purposes.

Caveat loans essentially work to release equity in a property, similar to second mortgages.

Unlike home loans, there are a range of different purposes that caveat loans are designed for.

  • Paying a one off lump sum expense such as a tax debt.
  • Providing instant capital to tackle a wide range of business challenges, or take advantage of opportunities such as bulk stock orders, expansion, acquiring equipment and human resources.
  • Preparing for a property sale (this doesn’t always need to be for a strictly business purpose).
  • Renovating a business premises.
  • Property buyers even use caveat loans to secure their next dream property prior to selling their existing place (property developers are very familiar with using a caveat loan for this purpose. They will access a short term loan to fund the construction of a building and then use the sale proceeds to repay the loan, quickly).

It’s important to access any legal or financial advice that you need to before you apply for a caveat loan.

How to apply for a caveat loan

If you need funds quickly, then low interest rates and excellent customer service is just the start of your caveat loan journey with Diverse Funding Solutions.

Simply fill in your details to access our express quote request, or get in touch with our team to apply for a caveat loan, today!

We have offices across Australia, and look forward to helping you on the path to profitability, by giving you the cash you need, now.

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