Australia is heading into difficult economic times. Because of this, more and more business owners are seeking privately funded caveat loans.

At DFS, we understand that securing a business loan can be daunting, even at the best of times, so we have put together this information on caveat loans to inform and assist you.

A caveat loan can be a good option when you:

  • Require quick access to finance – Bank loans can take weeks or even months. Caveat loans take a few days.
  • Are asset rich but cash poor.
  • Own property with equity.
  • Are dealing with bad credit/debt.
  • Find the banks difficult to work with.
  • Want an easy and simple form of finance.

That’s why there’s currently a high interest in businesses exploring short term caveat loans.

You can read: What Is A Caveat Loan? – A Complete Guide For 2020.

DFS are caveat lending specialists. We thrive on solving difficult finance problems for property developers, investors and business owners.

What are Caveat Loans?

Caveat loans are a short term business finance solution. They can give you fast access to funding when secured against a property.

Utilising the equity you have in the security property, a caveat loan is quicker and simpler to acquire than a traditional business loan.

Paperwork is minimal and loans can be approved and settled in just a few days.

In comparison, the assessment and settlement processes from mainstream lenders is usually document heavy and can take weeks or even months to settle.

What Can You Use a Caveat Loan For?

You can use a caveat loan for a wide range of business purposes, including:

  • Purchase real estate.
  • Property development, renovations and improvements.
  • Business cash flow.
  • Purchase a business.
  • Pay outstanding taxes to the ATO.
  • Consolidate and/or pay off existing debt.
  • Almost any business purpose.
happy business woman with caveat loan

How are Caveat Loans Secured?

A caveat loan is secured against an existing property.

When a caveat is put on a property, the property can’t be used as security against any other finance. It also can’t be sold. This lender’s interest in the property is released once the caveat loan is repaid.

The loan-to-value ratio (LVR) can be up to 100% for a private caveat loan arranged by DFS. This means you can borrow up to what your property is actually worth, not just 50 to 90% of its value. For example, if your property is valued at (or has equity of) $1 million, you can potentially borrow up to $1 million.

How Can Caveat Loans Help Australian Business Owners?

People often don’t have time to wait for a bank loan. Also, many people are simply asset rich and cash poor.

Despite having sufficient equity on a property, a lot of business owners in Australia don’t have proven business profitability or cash flow.

This makes it difficult for them to meet the strict lending criteria that banks require for business loans.

What’s the Difference Between 100% Caveat Loans and a Second Mortgage?

A caveat loan is different to a second mortgage (which allows you to tap into equity you have in your property). Second mortgage lenders have stricter lending criteria because the lender who provided the first mortgage has priority if the borrower defaults on repayments.

Caveat loans on the other hand are more straight-forward. A caveat loan property can’t be collateral for any other finance. This restriction simplifies the lending criteria, making it easier to gain approval for this type of short term business loan. Caveat loans settle faster as a result.

business man on construction site

Advantages of DFS caveat loans:

  • Simple 1 minute express quote.
  • Fast-tracked approval.
  • Australia’s lowest rates.
  • Flexible terms.
  • Fees are clear and upfront.
  • Personal customer service from people that genuinely care.
  • Urgent settlement Australia-wide (for some clients, we are able to settle on the same day).
  • Minimal documentation requirements (for example, no evidence of business trading history or revenue forecasts are required).
  • No credit checks.
  • Loan amounts of up to 100% of your property value (many banks and other lenders will only lend between 50 and 90% of the value of your property).
  • loan terms from 1 to 36 months with potential options to extend (many other lenders only provide terms up to 12 months).

We arrange flexible, short term caveat loans and tap into Australia’s largest network of private lenders to offer our clients the best finance options.

Interest rates, loan terms and repayment schedules can be tailored to your needs.

Why are Fast Caveat Loans Attractive?

Fast caveat loan approvals can enable our DFS clients to get funds quickly. This allows them to capitalise on business opportunities that emerge in Australia’s highly competitive markets.

Regardless of the size of your company, the type of business you’re in, and why you need funding – caveat loans are an option well worth considering. They work best when the potential benefits of your business opportunity outweigh the cost of the funding.

Case Study – Using Caveat Finance to Buy a B&B

One of our recent clients in Melbourne had a residential property in worth $1.4 million. $625,000 was owing on their mortgage, meaning that they had $775,000 in equity.

They were running a sound recording studio and wanted to buy a bed and breakfast business just outside of Melbourne. They needed a short-term loan of $200,000 to complete the purchase. Their exit strategy was to pay off the short-term loan with the funds from business profits.

They completed a caveat loan application with us at DFS over the phone, offering their property as security. We had an approval and a letter of offer back to them the same day, subject to the valuation of their property. This approval enabled them to make an offer on the B&B premises to secure the opportunity.

Our valuation of the client’s property was completed within two days and we provided the funds to go ahead with their B&B purchase within three days.

mature business lady smiling

Case Study Sydney– Using a Caveat Loan to Buy a Medical Centre

Another one of our recent clients owned both their own home and an investment property. An opportunity arose to buy a medical centre. They needed to move quickly to beat a competitor from buying it. However, the business bank loan approval process often takes at least 3-4 weeks. It was time that the client simply didn’t have if they were going to capitalise on this opportunity.

Private lending via caveat loan was their only option for a fast approval and settlement. They contacted us here at DFS and we arranged the finance they needed within days. They are now the proud owners of a Sydney medical centre.

How Can DFS Help You?

DFS opens a new window of opportunity by allowing you to tap into the value of your real estate property and access the funds that your business needs.

We have helped many clients by providing them with caveat loans. Our clients have access to Australia’s largest flow of short term private capital for small, medium and large businesses. We also provide business owners, investors and developers with the best private finance rates Australia has to offer.

Applying for our Caveat Loans Online

At DFS, you can apply for a caveat loan online.

We understand the importance of quick business finance application approvals and settlements. That’s why we provide fast and easy caveat lending opportunities. We have:

  • a simple 30-second caveat loan application process,
  • quick assessment and approval, and
  • super-fast settlement.

Our 4-step process is straightforward and client-focused:

Step 1. First, fill out our express enquiry form. The form does not obligate you to accept any offer we might make to you.

Step 2. We confirm your information and assess your financial needs, situation and potentially any valuations required.

Step 3. We will match you with a great Australian private lender and arrange suitable terms and conditions depending on your unique situation.

Step 4. If you agree to the terms, we fill out some simple paperwork, and pay out the caveat capital to your bank account.

Alternatively, you can contact us online or call us on 1300 94 22 33 to learn more about your private finance options with Diverse Funding Solutions.

Work with us to solve your cash flow and finance problems quickly and hassle-free! One of our loan specialists will take the time to discuss your business and how a short term caveat loan secured against real estate may be able to help your business.

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