The Top 4 Reasons Business Owners Should Consider Using Caveat Loans

By: Aaron Robbins0 comments

The Top 4 Reasons Business Owners Should Consider Using Caveat Loans

The idea of applying for business loans can make Australian business owners shudder, but caveat loans are changing that!

Bucking the business loan trend, caveat lending is fast, efficient and hassle-free.

If you want goosebumps of the good variety when it comes to business financing, then you’ll be excited to read the top 4 reasons that business owners should consider using caveat loans.

1. Caveat Loans solve a wide range of business finance needs

Throughout your business’ tenure, there are going to be a myriad of different changes, evolutions and opportunities that all require funding.

Caveat loans are perfectly positioned to provide funds quickly for almost every business purpose.

Commonly, caveat loans are used to:

  • Improve a business’ cash flow or inject working capital into the business, particularly for businesses who have been affected by natural disasters such as flooding or by COVID.
  • Make a large stock purchase.
  • Renovate physical business spaces, shop front, offices and workshops.
  • Re-brand or expand.
  • Prepare for the Financial Year changeover.
  • Pay off business debt or perform a debt consolidation.

Caveat lending doesn’t restrict the use of the funds, which means that business owners can apply for a caveat loan for almost any and every business funding need.

2. Business owners don’t need to worry about bad credit affecting their chances of caveat loan approval

In starting up a business, or even keeping it afloat during tough times, a business’s credit rating can take a hit, even that of the business owner themselves.

Sometimes, a poor credit score prevents business owners from applying for bank loans and other business loans due to concerns about needing to pass a credit check.

A fundamental difference between traditional lenders, such as banks and credit unions, and private lenders like those who we access at Diverse Funding Solutions, is that we set our own lending criteria, which means we don’t need to rely on the results of a credit check to determine whether we can offer a business owner a caveat loan.

We operate under an Australian Credit Licence, but can offer lending criteria flexibility. Business owners can proceed with a lending transaction with Diverse Fundin Solutions in confidence, knowing that their personal circumstances or credit file aren’t going to affect their caveat loan application.

3. Fast caveat loans don’t leave business owners waiting

No matter what business purpose you’re looking to satisfy with a caveat loan, the chances are that you need money fast.

Business owners don’t have the luxury of being able to sit around for the weeks and months that other lenders often make them, while processing their finance applications.

Unlike other loans, caveat loans are known as fast finance for a reason — in fact, Diverse Funding Solutions offer fast approvals, as quickly as 24 hours!

When you apply for a caveat loan with DFS, we can offer a pre-approval as quickly as the same day you apply — and fund the loan in as little as 48 hours.

4. You don’t need to provide cash flow or revenue forecasts for a short term caveat loan

When borrowing money for business purposes, other lenders make businesses jump through many application hoops, particularly when it comes to the paperwork required.

Some lenders request years of tax returns, or revenue forecasts to prove their cash flow.

Private lending means that we don’t set the same hoops for businesses — instead, minimal documentation is required for a caveat loan application when you apply with Diverse Funding Solutions.

Most of the time, we only ask for three documents to assess your application: a council rates notice, a mortgage statement, and identification! Often, there aren’t even formal valuations required.

How do short term caveat loans work?

Caveat loans are a form of business loan that uses the equity within your real estate property to fund a range of business purposes.

Property owners who also run a business find caveat lending to be an efficient and effective way to leverage the equity in their property to their advantage.

The security property

Whether you hold residential property or an investment property, if you have sufficient equity you could be eligible for a short term caveat loan.

You may be wondering ‘how are caveat loans secured?’ — caveat loans are secured by registering our lender’s interest over your property title.

Provided that you hold real property in Australia, we can look to place a legal caveat on it’s title to use it as security for your caveat loan.

This is still possible even if you have a registered mortgage on the property, including a first mortgage or second mortgage.

The legal caveat simply prevents other transactions from occurring on that property while the caveat is active, which include transferring ownership or selling the property.

Being short-term loans, a caveat loan will only place this caveat over your title for a short period of time — until you’ve repaid your caveat loan.

Due to the legal jurisdiction in Australia operating differently to that overseas, we cannot accept overseas properties as security.

Loan Amount

Your loan amount really depends on your needs, and your property value – DFS can offer up to 75% of your property’s available equity via a caveat loan.

If you own your property outright, then you may be able to effectively access 75% of your full property value!

Repayment schedules

As we mentioned earlier, our criteria for extending a caveat loan doesn’t rely on credit ratings or existing cash flow of your business.

How we determine your capacity to repay the loan is through setting a viable exit strategy for the loan and setting out a repayment schedule.

We are happy to work with loan terms and a repayment schedule that works with your unique financial situation.

Loan Terms

You might have picked up by now that caveat loans are a short term loan which you repay over a short period of time.

Usually, a caveat loan is offered over 2 – 12 months, which is why many confuse caveat loans with a second mortgage.

At DFS, we are happy to work with terms relevant to your business and can tailor your short term caveat loan to suit your needs and exit strategy.

Interest Rates

Did you know that Diverse Funding Solutions offer some of the most attractive caveat loan interest rates in Australia?

Our caveat loan interest rates starts at only 0.77% per month. You can rest assured that you are accessing an affordable interest rate when you access a caveat loan with DFS.

There are also no hidden fees or exorbitant application fees.

Legal or financial advice?

Dealing with a legal caveat over real property often prompts many clients to ask about whether they need to obtain professional advice when using short term caveat loans.

While there are many legal essentials that Australian businesses need to follow, there is no requirement to obtain professional advice before using a short term caveat loan.

We operate as an Authorised Credit Representative of an Australian Credit Licence, but we cannot offer legal advice nor financial advice, which is why it’s essential business owners seek any advice they feel is necessary before proceeding with a caveat loan.

Ready to apply?

If you are ready to release equity in your property to realise your next business opportunity, free up cash flow or simply get ahead, then start your hassle-free caveat loan application with Diverse Funding Solutions today.

An express quote request is free and takes no longer than one minute to complete.

From here, we will ask some questions over the phone then put you in front of one of Australia’s best private lenders.

With offices all over Australia, we are able to help business owners across the country, get in touch with us now!

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