How Importers Can Use Caveat Loans

By: Aaron Robbins0 comments

Numerous business owners use caveat loans to fund a range of business purposes.

If you’re an importer or looking to establish an import business in Australia, a short-term caveat loan could help you kick start your business or boost your working capital to get back on track after a trying few years.

short-term caveat loan can be an ideal finance solution for importers.

We explain how accessing the money to make money for your import business can be made possible through caveat lending below.

What are short-term caveat loans?

Short-term caveat loans, otherwise known as fast caveat loans, are business loans that use the equity in a security property to fund the lending transaction.

If a business owner also owns a real estate property (including a residential property or investment property), they can utilise the equity in that property for caveat finance.

A caveat loan is created when the lender’s interest on the property is registered via a legal caveat over the property title.

What might surprise you is that you can apply for a caveat loan even if you hold an existing mortgage, including a first mortgage or second mortgage over your property.

This is because the legal caveat sits behind any mortgages.

Unfortunately, caveat lenders cannot use overseas properties as security due to differences in the property legislation overseas.

What is a caveat loan typically used for?

The flexibility of caveat lending makes caveat loans a finance solution that solves many business finance needs.

Many clients of ours use caveat lending to:

  • Perform a debt consolidation of their existing business loans
  • Cover ATO debt
  • Prepare their business for sale or expansion
  • Bridge the funding gap between property purchase and property sale
  • Hire new staff
  • Purchase stock and inventory
  • Expand their vehicle fleet, assets or machinery
  • Immediately boost their cash flow to improve working capital

Provided you have sufficient equity in your real estate property, you may be able to instantly improve your business’s cash flow by accessing a caveat loan.

At DFS, your loan amount could be up to 75% of the available equity you have sitting in a property.

While caveat loans used to be the niche product of property developers, many business structures can benefit from the flexibility and efficiency of a caveat loan.

For example, importers may not always have the working capital sitting around to make the next large import purchase.

The delays in shipping due to the COVID pandemic and supply chain issues faced in Australia recently have also impacted the import industry.

A caveat loan may be the saving grace your business needs to take advantage of an opportunity or fill its next shipment.

Why caveat loans are one of the best business loans for importing businesses

Caveat loans have many incredible plus-sides.

We take a look at why the caveat loans offered by Diverse Funding Solutions are one of the best forms of business finance for importers:

No need to worry about your credit file

We source the best private funding solution for your caveat loan needs at Diverse Funding Solutions.

Private lending criteria differ vastly from other lenders — the fundamental difference being that a credit check is not necessary as part of your caveat loan application.

This makes caveat loans a fantastic solution for business owners who have previously struggled with bad credit or whose import business is only just getting off the ground.

Particularly if you only do a bulk import once or twice per year, your cash flow or working capital may be disjointed on paper, or perhaps you’ve experienced borrower defaults in the past, given the trying times the business world has faced recently.

Private lenders look to set appropriate exit strategies and repayment schedules to determine your suitability for repaying the short-term loan, not rely on the outcome of a credit check.

The ability for lenders to look past what’s on paper and into the inner workings of the import industry makes them an excellent option for importers.

Minimal documentation required

As you may have guessed by now, the application process for caveat loans is unlike other loans, especially a home loan.

We pride ourselves on offering a hassle-free application process, with minimal documentation or paperwork required.

Most other lenders will ask for multiple years worth of tax returns, bank statements, revenue forecasts and many other pieces of documentation before being able to provide an outcome on your application.

Our process is straightforward and efficient: simply fill in your details to request an express quote, and one of our team will be in touch. After that, the usual documentation required is a council rates notice, mortgage statement and your identification, with no valuations required for some applications!

Fast funding

One of the main benefits of having such a straightforward process for our caveat loan applications that is that we get you an answer in a timely manner.

Most business opportunities need money fast; bank loans from a traditional lender can take weeks or months to be funded.

Caveat loans aren’t known as fast finance for no reason — we can get your import business funds quickly.

Some of our caveat loans are funded within as little as 48 hours!

Competitive Rates

Fast approvals aren’t all that a DFS caveat loan offers; Diverse Funding Solutions also offers some of the most competitive caveat loan interest rates in the private lending market.

You can access caveat finance with interest rates from as little as 0.77% per month through Diverse Funding Solutions.

Naturally, the interest rate you will pay on your caveat loan will vary depending on your personal circumstances.

The added benefit is that our competitive interest rates don’t come with hidden fees.

In fact, we will step you through all there is to know about your caveat loan throughout the loan application, including your interest rate, applicable fees and repayment schedule.

No need for legal or financial advice

You may think that placing a legal caveat on real property requires legal or financial advice before proceeding.

While we always advocate seeking professional advice you feel is necessary before making any significant business decision however, there is no requirement to have professional advice before taking out a caveat loan.

It’s handy to know that a caveat lender doesn’t require permission from any existing mortgage lender for home loans or second mortgages that may be present on the property, but that other transactions, such as a sale or transfer of ownership, can’t occur while there is a caveat over the property title.

We can’t offer legal advice, but we can provide great service and a loan product unlike any other mortgage or business loan you’ve had previously.

Flexible loan terms

Once the lender receives your application for caveat finance, they work with terms relevant to your particular needs.

Unlike the rigidity of a mortgage or other loan, we can offer caveat loans from 1 month up to 24 months and beyond if it’s a viable option for your business.

We understand that the market cycles for every importer are different; that’s why we are happy to work with loan terms that suit your unique needs.

Fast caveat loans look different for every business.

Accessing a caveat loan for your importing business

There’s no denying that to import goods, you need money upfront.

If you have equity tucked away in your property value, then short-term caveat loans can provide the funds your business needs to cover the cost of your imports.

Once you’ve received payment from your clients or customers, you can then look to repay the caveat loan while banking the profit and boosting your business’s working capital for the next shipment of goods.

If you’d like to discuss how a caveat loan can expedite your importing business’ growth trajectory, get in touch today!

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