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Cash flow solutions are required universally to support growth or help get out of a bind. We’re lucky to be spoilt for choice and there is a broad spectrum of commercial finance lenders that provide business funding.
Increasingly, Australian business owners are considering alternative types of finance to meet their funding requirements – including bridging loans and caveat loans. In particular, caveat loans are increasingly popular as they’re a simpler and faster way of accessing funds.
Here are some reasons why business borrowers often select a caveat loan:
Image by Credit Commerce from Pixabay
The application process is fast and easy
One of the things that borrowers appreciate about caveat loans is that they’re a quick and easy way to access finance.
The application process for a caveat loan is relatively straightforward as the loan is secured against a property. This means that when you take a caveat, you are using your property as security for the money you borrowed. The lender lodges a caveat on your property, meaning you cannot sell or create additional transactions using the same property. Once repayments are complete, the caveat is immediately removed.
Proceeding with a caveat loan is often preferred if you have time restraints. The amount you can borrow correlates with the equity you have in the property being offered as security.
Online application
There’s nothing better than being able to apply for a loan at your own convenience, 24/7. An online application is increasingly preferred as it’s quick and convenient. Many lenders provide the option to apply for caveat loans online – particularly private lenders, specialist lenders, non-bank lenders and fintechs.
Minimal documentation
Short-term caveat loans are renowned for having minimal documentation requirements, which is also why the application and approval times are much faster.
Repayments are flexible
Caveat loans are popular as the repayment schedule is usually flexible. This varies from lender to lender, though is usually between a few months to three years.
Caveat loans can be used for a variety of purposes
Common caveat loan uses in business include smoothing out cash flow, such as paying down invoices or wages. This facility is also used to meet unexpected costs or expenses, purchase stock or equipment and help with business expansion.
Key takeaway
If you own a property, you can apply for a caveat loan, even if it is the subject of a first mortgage. Caveat loans can be a relatively cost-effective financial solution, as well as a fast source of short-term funds. They have a quick turnaround time and minimal documentation needed, and can often be applied for online. It’s wise to speak with a mortgage broker to ensure you’re obtaining the most suitable loan for your requirements.