Get on Top of Tax Debt This New Financial Year With a Caveat Loan

By: Aaron Robbins0 comments

It’s that time of year again, when the new financial year kicks into gear and businesses start to look at solving their tax debt — a caveat loan could be the fast and hassle-free solution.

Other bank loans often won’t allow businesses to refinance in order to repay debt to the ATO; fast caveat loans are offered through our private lending facility, meaning that we can help Aussie businesses out where other lenders can’t.

To find out more on how you could release the equity within your property to repay your ATO debt, read on as we explore how caveat lending could work for you.

Caveat loans: what are they?

Caveat loans are a type of business loan, often offered by private lenders such as us here at Diverse Funding Solutions.

A caveat loan is secured by the equity that’s available within a property that you own, making them an ideal solution for property owners who also own a business.

Short term caveat loans are known for being a fast finance solution, as they’re designed for fast approvals and to fund your business within a matter of days from applying.

When you apply for a caveat loan with DFS, we make the process as hassle-free as possible, with minimal documentation or paperwork required.

Minimal paperwork and speedy approvals aren’t where the plus sides to caveat loans end; here’s what more you need to know about caveat loans:

Your business can access funds quickly

Possibly faster than every other lending transaction available to your business, caveat loans are typically funded in as little as 48 hours from when the lender receives your caveat loan application.

Caveat loans are designed for the short term

When you access a caveat loan, it’s not designed to tie you down for years upon years.

Caveat loans are offered for a short period of time, with loan terms usually starting at one month and going up to 36 months.

At DFS, we like to remain as flexible a lender as we can be, which is why we will strive to work on terms relevant to your business’s unique financial situation and extend the loan term if need be.

You can lend up to 75% of your available equity via a caveat loan

The equity that you have within an existing property is what secures your caveat loan.

We offer caveat loans with loan amounts of up to 75% of the available equity in your security property. So if you own property worth $1,000,000, you can quickly and easily access up to $750,000 with a caveat loan.

Fast caveat loans come with affordable interest rates

Before submitting a caveat loan application, many borrowers wonder whether they’re going to be paying through the nose when it comes to interest rates.

Your caveat loan interest rate could be as low as 0.77% per month, thanks to our market-leading caveat loan interest rates.

To get an idea of what interest rate you might pay on your desired loan amount, request an express quote — they’re free, only take 60 seconds, won’t affect your credit file, and you’ll have a response back in a very timely manner.

Short term Caveat Loans are possible even with existing mortgages

Even if you have an existing mortgage or home loan, you can apply for a short term caveat loan, because a caveat loan is secured by placing a legal caveat on the property title which sits behind any existing registered mortgage.

This includes a second mortgage, which could be good news if your property value has risen in recent years, thanks to Australia’s booming residential property market.

More than ever, our clients are finding they have sufficient equity to fund a short term loan for their business.

Keep in mind: While a legal caveat exists on the title deed of your property, it prevents other transactions from occurring, such as ownership transfer or sales.

A legal caveat effectively register’s the lender’s interest on that property.

Once your caveat loan is repaid, the caveat is removed.

Caveat loans come with flexible lending criteria

Unlike other business loans that require an enormous amount of financials, including bank statements, tax returns, and revenue forecasts, a caveat loan through Diverse Funding Solutions comes with flexible lending criteria.

This is the fundamental difference between accessing private lenders versus traditional lenders for loans that fund business purposes.

We rarely need to perform a credit check, meaning that if you’ve been left with bad credit, whether from setting up your business or your own personal circumstances, a caveat loan is still easily within reach for your business.

Shh, don’t tell: Caveat loans don’t come with the hidden fees that some lenders like to keep quiet. We are lenders who put everything on the table, so you are never left wondering about application fees.

How to use a short term caveat loan to repay ATO debt

Using real estate property or an investment property to help cover your business’ ATO debt can be a wonderful way to continue to uphold your business’s cash flow and working capital.

The ATO has intensified its debt recovery actions after providing some breathing space for businesses affected by COVID.

Diverse Funding Solutions is ready to provide money fast for business purposes, including repaying money owed to the tax office — an area where most lenders are unable to help.

1. Calculate your available equity and desired loan amount

If you’re anticipating a tax debt, or already have an amount owing to the Australian Tax Office, the first step will be to calculate the equity you hold in your property to understand if you have enough equity to utilise a caveat loan.

It is important to note though, that overseas properties can’t be used as security.

Remember that it doesn’t matter if you have a first mortgage or second mortgage on the property.

Plenty of caveat loan borrowers successfully borrow and repay their caveat loan with home loans and second mortgages pre-existing.

This is a great opportunity to look at your full debt situation to see if you could roll any other debt into your caveat loan, effectively performing a debt consolidation!

Good to know: No valuations are required for most caveat loan applications!

2. Think about your exit strategy

Other loans look at your business’s cash flow and credit strength as a means to determine how you’ll repay your loan.

Our repayment schedules for caveat loans are underpinned by an exit strategy; that is, how you will repay the loan.

Exit strategies may come in the form of expected sale proceeds from excess stock, property or equipment, anticipated insurance monies, dividend payments, or even refinancing your mortgage with a major lender down the track.

3 . Access any legal or financial advice your business needs

As one of Australia’s leading finance broking firms and private lending companies, we offer responsive lending solutions for businesses as an Authorised Credit Representative of an Australian Credit Licence.

Unfortunately, our licence doesn’t extend to providing professional advice when it comes to financial or legal decisions, therefore, we can’t offer legal advice regarding caveat lending.

Disclosing your business tax debts

Looking to use real property to pay off your tax debts can do more than just keep the tax office off your back and money in your business account.

If your Australian business meets certain criteria, then the ATO may report information about your business debt to credit reporting bureaus.

At DFS, we work with Australian businesses every day.

We have offices in Sydney, Melbourne, Brisbane and Perth that can provide assistance to businesses Australia-wide.

Start a conversation with our team now to discuss how using a caveat loan can relieve you of your tax debt and set your new financial year off on the right foot.

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