The Government is Giving Your Business a Cash Flow Boost; a Caveat Loan Could, too!

By: Aaron Robbins0 comments

If your business turns over more than $75,000, you can look forward to a cash flow boost, thanks to Government measures announced in last week’s Federal Budget.

Throughout the changes of a business life cycle, there’s one thing that remains constant: the need for cash!

Even asset rich but cash poor businesses struggle to meet the ever-evolving demands of operation.

While the proposed changes in how GST and PAYG instalments are made are sure to give your business a little wiggle room, the momentum of money can be hard to sustain — thankfully, there are some ways to boost your cash flow that you may not have previously considered.

If you’ve weathered the COVID storm, the recent floods or are just in need of a top-up to keep you covered for a few months, then continue reading to discover what the budget proposals mean for your business and how a short term caveat loan can be an additional benefit booster to your cash flow!

How is the Government improving cash flow for businesses?

The Federal Budget was released on March 29, and with it came proposals to help support the flow of funds for businesses.

It’s anticipated that the measures will help more than 2.3 million of Australia’s small businesses and sole traders — here’s how:

Lowering Tax Instalments

The Government’s statutory formula to calculate the GST and Pay As You Go (PAYG) tax instalment rates can get complicated, so instead of going into details, we’ve broken down the facts to deliver you the good news.

The Government is going to lower the rate that you have to pay on your GST and PAYG instalments to 2% throughout the 2022/23 Financial Year. This is a significant reduction, down from 10% under the old formula.

The average benefit per business is estimated to be around $800.

Of course, the legislation that will enable this measure does need to pass through Royal Assent, but will become effective for instalments that fall due after it comes into force, within the 2022/23 Financial Year.

Improved PAYG System

Another way to help improve the movements and accessibility of funds for businesses is a proposal to calculate the Pay-As-You-Go system based on the financial performance of the business.

If your business or company’s financial performance declines, you might be able to get refunds of instalments that are paid automatically, putting those funds back to where you need them most.

Getting funds quickly when you need them most is also in your hands, not just the Government’s — many Australian businesses and companies are accessing fast caveat loans to help smooth their financial path forwards.

The benefits of using a caveat loan to boost business cash flow

Caveat loans are an attractive option for many Australian business owners and property owners for the following reasons:

Fast and easy approvals

When you run your own small business or company, you are undoubtedly time-poor.

Bank loans and loans offered through other lenders can drag on for weeks or months thanks for the excessive bureaucracy of an Australian Credit Licence, resulting in a mountain of red tape and application requirements to get through.

A caveat loan application through Diverse Funding Solutions is hassle-free.

Private lenders like us have more flexible lending criteria, which means we aren’t going to ask for revenue forecasts, a formal property valuation or ask you to satisfy a pre-approval before actual approval.

Instead, we look to set appropriate repayment schedules and a suitable exit strategy before funding your loan in as little as 48 hours.

Our application process is completely unique and not like other loans, including a standard business short term loan!

No need for a credit check

If you’re worried that a lender will turn their nose at the first whiff of your credit history, then you don’t need to worry.

We know that the course of business isn’t always smooth sailing, and will sometimes leave its mark on your credit file.

The benefit of DFS being privately funded is that we have no need to run a credit check, which makes ccaveat loans ideal for business owners with bad credit.

Competitive Interest Rates

Other loan types can cost an arm and a leg in application fees, interest rates, and even other hidden fees – we are proud to buck this trend, offering the lowest rates of Australia’s private lenders.

Our caveat loan interest rate starts at only 0.77%pm. If you’re a new customer, you can look forward to further discounts, as well!

Being able to save interest is yet another passive way that caveat lending can help you retain working capital for your business.

More flexible than a second mortgage

Second mortgages definitely have their place in the loan space, however, the fundamental difference between a caveat loan and a second mortgage is how they are secured.

A second mortgage requires approval from the first mortgage lender to gain interest in the property, because a secondary mortgage lender can have access to the home if you default.

We fall back on our exit strategy instead of being able to sell your home if you default, which is why a caveat loan is simpler.

We don’t need to gain approval from any existing mortgage lender – we simply apply for a legal caveat on the title deed, and that’s it!

Top tip: We offer great caveat lending solutions but aren’t able to offer legal or professional advice.

Accessing legal or financial advice prior to making any large decision for your business is prudent, including before applying for a Caveat Loan.

What can I use a caveat loan for?

Out of the business loans available on the market, Caveat Loans often provide the most flexibility when it comes to the purpose of the loan.

There are a myriad of different business purposes that a Caveat Loan can help fund; fundamentally though, every purpose is achieved through providing a lump sum boost of funds.

This makes Caveat Loans a fantastic solution for:

  • Paying a yearly or lump sum requirement such as an Australian Tax Office (ATO) payment or debt
  • Offsetting invoice lags
  • Overcoming supply chain disruptions
  • Preparing a business or property for sale
  • Accessing funding for another property before your existing property sells

No matter what the need, the flexibility and efficiency of fast caveat loans make them an ideal solution for a range of cash needs.

Did you know that caveat loans settle faster than any other business loan? We can have your caveat loan application funded in only 48 hours!

How does a Caveat Loan work?

A caveat loan is a short term business loan that effectively acts to release equity in a real estate property that you own.

How much you can access as a loan amount for a caveat loan really depends on your property value.

At DFS, we offer caveat loans up to 75% of the equity in the security property.

Provided you have sufficient equity, then you can have sufficient funding for a wide range of needs.

How are Short Term Caveat Loans secured?

As we mentioned earlier, caveat loans in Australia are secured using equity in a real estate property.

Even if there is a registered mortgage on the property, caveat loans work by registering the lender’s interest on the title deed of the property, which sits behind an existing mortgage.

The loan process is simple, including how we register our interest on your property and remove the legal caveat once the loan is repaid.

There’s no need for complicated and extensive paperwork like you might experience with home loans or a first mortgage.

Important to note: Due to the legal jurisdiction differences, we cannot accept overseas properties as security for a caveat loan.

What are the loan terms of short term caveat loans?

A lot of people wonder what the loan terms might be when they apply for a caveat loan.

A typical loan term is around 12 months, however, with our flexible approach to helping Aussies businesses like yours, we’re happy to extend this out if need be.

Unlike a home loan or even other fast finance solutions, we work to find an agreement on terms relevant to your personal situation – which you simply don’t get on other loan products, even second mortgages.

Who offers fast caveat loans?

Of the Caveat Loan lenders in Australia, Diverse Funding Solutions leads the pack with the lowest interest rates and excellent customer service.

Our firm’s principal is an Authorised Credit Representative, meaning that you can apply for a caveat loan with confidence through DFS.

Simply fill in your details to get an express quote underway — you could be only 48 hours away from receiving the cash injection your business needs to boost it to success this year.

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