Rising Fuel Costs and Your Business: How Caveat Loans Can Help

By: Aaron Robbins0 comments

Rising fuel costs are having a major impact on businesses across Australia at the moment.

If that isn’t enough to deal with, many Queensland and New South Wales businesses have had their operations derailed by floods. This is having a flow-on effect for businesses in their supply chain.

Both of these things have happened after businesses have been forced to deal with nearly two years of COVID-19 restrictions. With so many local and global events happening in such a small period, consumers and businesses alike are feeling the pinch.

Read on to find out about the impact of rising fuel costs, as well as how you can use a caveat loan to help if your business cash flow is affected.

The impact of rising fuel costs in Australia

The price of fuel in Australia is at record levels. Analysts are warning that prices of over $2 will become the ‘new normal’.

It’s hard to believe that we were paying under a dollar in some parts of Australia shortly after the pandemic hit just two years ago.

Unfortunately, those days are now a distant memory, thanks to Russia’s invasion of Ukraine. Russia is one of the world’s leading oil and refined petrol producers.

Since the Ukraine invasion, the Australian government has banned the import of oil and refined petrol from Russia, among other products.

Many other countries have imposed the same sanctions regarding imports from Russia. This has reduced the supply of oil and refined petrol on world markets, resulting in sharply higher petrol prices.

This is where the basic principles of supply and demand come into play; the supply of oil and fuel is (very) low, demand is (very) high, so consequently, the prices rise astronomically.

Being such a large country, Australia is heavily dependent on both road and air transport for a huge range of goods and services. So anyone in the transport industry would be feeling the price increases very strongly.

Rising fuel costs are having both a direct and indirect impact on Australian businesses.

The direct impact is obviously in paying fuel prices at the bowser for any of your business vehicles. This reduces your cash flow.

The indirect impact is felt when your customers have less money to spend on your products or services because they are paying more for their own fuel.

Every Australian consumer is affected by high petrol prices, even if they don’t drive a vehicle themselves. That’s because of rising supermarket prices.

Australia is heavily dependent on the road transport of supermarket products, and everyone has to buy groceries to survive.

Rising fuel costs are also felt in the cost of any of your business inputs if your supplier’s prices have had to rise to cope with increased delivery costs.

When your suppliers put up their prices, it cuts into your margins and impacts your cash flow.

Many businesses choose to pass these price increases onto their customers, but when consumers are already struggling to afford basics like food and fuel, they’ll be less likely to spend money elsewhere — especially if the prices they’re used to paying suddenly skyrocket.

This causes a perfect storm of cash flow issues for your business:

  • Your suppliers become more expensive — reducing your cash flow.
  • Fuel is more expensive — reducing your cash flow.
  • Your customers are struggling with rising costs of living so they spend less — reducing your cash flow.

When prices rise rapidly for businesses and consumers, it can be enough to force a business to wind up.

If you’re looking for a way to inject cash into the business to help you navigate this economic bump in the road, a caveat loan might be able to help.

How short term caveat loans can help

Caveat loans are provided by private lenders rather than traditional lenders like banks who provide other types of business loans and bank loans.

They are a fast and effective way to quickly access cash for business purposes, that’s tied up in real estate property without having to refinance the existing mortgage.

They are also ideal for helping you to cope with short-term business cash flow issues.

Unfortunately, many businesses find it near impossible to access loans from traditional lenders at the best of times, not to mention when they’re experiencing cash flow issues due to increased costs and a decrease in sales.

Fast caveat loans from private lenders can help you with finance when your business needs it the most to help you get back on your feet.

Caveat loan FAQs

What is a caveat?

A caveat is a lender’s registration of an interest in an asset, which prevents the asset owner from selling it.

A caveat loan is a loan where the caveat is registered against an Australian property asset. The caveat is removed from the security property when the loan is repaid.

What is the difference between a caveat loan and a mortgage?

A mortgage gives a lender the right to repossess and sell your property if you don’t make your loan repayments.

A caveat on the other hand doesn’t give the lender this right. The caveat only prevents you from selling the asset while it is in place.

How are caveat loans secured?

While the lender doesn’t have a legal claim to your property, they are provided security in the sense that they hold the key to removing the caveat from your title.

Can you get a caveat loan if you only partly own a property?

Yes, you don’t need to own a property outright to get a caveat loan approved. As long as you have sufficient equity, you can use it as security for a caveat loan.

You also don’t need your mortgage lender’s approval to use a partly-owned property to get a caveat loan.

A caveat can be placed on the property title quickly and easily because the lender holding a mortgage over the property doesn’t need to give permission for the caveat to be put in place.

Who are private lenders?

Private lenders are individuals and businesses who provide finance to other individuals and businesses. They are not banks or financial institutions.

Can you get a short term caveat loan if you have bad credit?

Yes, the caveat provides the lender with security. This allows private lender caveat loans to be provided without the need for a check of your credit score in many cases.

You won’t be able to escape a credit check if you apply for any other type of business loan with a traditional lender like a bank or other financial services provider.

How long are caveat loan terms?

Caveat loan terms are flexible. They can range anywhere from a month to two years. You can negotiate the term that suits your needs with a private lender.

Can you get flexible caveat loan repayments?

Yes. You can arrange a repayment schedule that suits your business cash flow.

How much can you borrow with a caveat loan?

You can borrow up to 80% of the property value if you own it outright, or up to 80% of your equity in it if you partly own it.

How quickly can you get a caveat loan?

This is one of the major benefits of private lender caveat loans in Australia. They can be approved and have the funds transferred in as little as 24 hours if you’re eligible.

This is light years faster than any approval time you would get from a traditional lender like a bank. Caveat loans settle faster and the caveat loan application process is extremely quick.

In summary

It’s crucial to get the business finance you need when you need it. If you don’t, your business may struggle to survive.

With prompt access to cash, you can get through challenging times. Business caveat loans are a quick, short-term business finance solution to help you.

How we can help

Diverse Funding Solutions is a private lending specialist. We have a pool of over 200 private lenders.

Contact us today to discuss your eligibility and to apply for a caveat loan. If you’re eligible, we can match you with a suitable lender and arrange a fast approval.

The information contained in this article is general in nature. We recommend you seek legal or financial advice when considering your unique circumstances.

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