Caveat Loans

Name: Caveat Loans
Creator: Savvy
Published: 2022-01-05T09:28:20+10:30

It won't affect your credit score.

Written by , updated on July 26th, 2023

The features and benefits of short-term caveat loans

Receive your funds in 24 hours

Perhaps the most useful and desired aspect of fast caveat loans is the speed at which they can be processed, with funding available for borrowers as few as 24 hours after they apply.

Borrow up to or over $1 million

You can take out smaller online caveat loans of $50,000 or borrow up to as much as $1 million, although some lenders will cap their loan amounts at a higher level and enable you to borrow more.

Repay over one to 12 months

Caveat loans are only designed to be a short-term finance agreement, so you can take them out and repay them as quickly as within one month (or as long as 12).

Receive up to 100% of your property’s value

While some lenders will restrict your borrowing to 70% to 90% of the value of your property, others in the market will allow you to take out the full value of your home and repay it.

Fully online process

You won’t have to leave the comfort of your home when completing your caveat loan application, with the process taking place 100% online via your lender’s secure application portal.

Use funds however you like

Your short-term caveat loan money can be utilised however you like, whether you need it to purchase commercial property, improve your current premises or simply add to your business’ cashflow.

Types of business loan

Unsecured business loans

The most common type of business finance, unsecured loans enable businesses to access the funds they need without attaching an asset to the loan as security. Some lenders may allow you to borrow up to $500,000 and, because there's no collateral, offer same-day approval.

Secured business loans

If your business already owns valuable assets, such as property or expensive equipment, you may choose a secured business loan instead. These loans may increase your borrowing power beyond what an unsecured loan can offer and, crucially, typically come with lower interest rates.

Small business loans

Business loans don't always have to be worth hundreds of thousands. If you're operating a small business and need a boost to help you keep on top of your expenses or expand your company, you may be able to take out a loan starting from as little as $5,000 and unlock further capital.

Low doc business loans

Just because you don't have all the required documents for a standard business loan doesn't mean you're out of options. Low doc finance enables you to use alternative documentation, such as other business financials, in the application process to access the funds you need.

Lines of credit

A commercial line of credit allows you to draw from your loan account whenever your business needs access to their funds, instead of managing a lump sum and repaying it like a regular loan. This can add flexibility to your finance arrangement, providing money when you need it.

Invoice finance

Invoice finance presents another option to business operators looking to free up cash through outstanding invoices yet to be paid by their customers. Your invoice finance can either be invoice discounting or factoring, which present different options when it comes to your invoices.

Equipment loans

A common reason for seeking out a loan is to purchase commercial equipment. You can do this either with an unsecured arrangement or one with the equipment itself as collateral, with the latter potentially increasing your borrowing power and lowering your interest rate.

Supply chain finance

With this finance, when your business purchases product, your supplier provides an invoice which you send to your financier and pledge to repay by a set date. From there, your supplier sells the invoice to your financier at a discounted rate, while you repay the full amount to your financier.

Inventory finance

Under an inventory finance agreement, your lender pays your supplier directly for inventory, which allows it to be signed off and sent to you. From there, you can pay off your debt within a pre-determined period to your lender, which may be longer than the regular debtor period.

Overdraft facility

An overdraft facility is attached to an existing financial account belonging to your business, such as a transaction or savings account, and enables you to borrow up to a set limit after the account’s balance reaches zero. These overdrafts are repaid with interest, but only on what you use.

Cash flow loans

You may simply be in a position where your business needs a boost to its cash flow. If this is the case, there’s a range of stop-gap solutions which may be suitable for your situation, from standard unsecured loans to specialist cash flow loans, invoice finance or even an overdraft.

Why compare business loans through Savvy?

100% free service

It won't cost you a cent to compare a range of business loans through Savvy, enabling you to come back at any time.

Reputable lending partners

You can compare business loan offers through a range of trusted Australian lenders, giving you more confidence in the process.

Online comparison process

You can fill out our simple online form to generate business finance quotes tailored to your business' needs in minutes.

Top tips for increasing the speed of your online caveat loan approval

Determine exactly what you need your loan for

One aspect of caveat loans is that they come with restrictions on how you can use your funds once you confirm their intended use to your lender. While the uses themselves are flexible, lenders will want to see that you’re using the money the way you said you would. As such, it’s crucial to enter the process with a clear understanding of exactly what you’re needing your funds for. It may be useful to come up with an itemised list so you can accurately determine the size of loan required.

Have all your documents ready in advance

Preparing the correct documentation before you start your application is an important first step towards securing your funds quickly. Fortunately, though, caveat loans usually come with fewer documentation requirements than larger business loans, which are likely to require you to provide extensive business financials. While these may vary between lenders, you’re likely to be required to provide documents such as tax returns, both personal and business bank statements, a business plan and recent council rates notice.

Show consistent business revenue and trading

Another key element which helps determine the size of your loan is your business’ monthly and annual turnover, as well as its expenses. By showing consistent revenue generated over a longer period, your lender is likely to be more willing to approve you for the amount you’re asking for. Being more comfortable in terms of your business’ available cash will automatically make you a more appealing customer to a lender, so the process can be sped up.

Submit your application early in the day and week

It may not seem like it makes a difference but applying as early in the week as possible minimises your chances of having your application drag out over several days. For instance, applying on a Monday morning could mean you have your funds available by the next morning, but a Friday afternoon application will likely only be properly processed by the following Monday. Even small factors like these can make a difference to the speed of your application.

More questions about caveat loans answered

How do caveat loans work?

Caveat loans are a type of finance in which your loan is secured by property you own, which is usually still under finance with a mortgage. Your lender places a caveat on the property for the duration of the loan until it’s repaid, meaning it reserves the right to acquire and sell the asset should you become unable to fulfil your obligations as a borrower (albeit remaining second in line to do so after your mortgage lender). The existing equity in your property can also be used as security.

Can I sell my property under a caveat loan?

No – you’re barred from selling your property whilst under the terms of a short-term caveat loan, meaning you’ll have to wait until you’ve repaid your loan amount before putting it on the market. This is because your lender is agreeing to loan you your desired amount on the basis it can take ownership and sell your property should things go wrong.

Can my property act as security on multiple loans?

No – similarly, because your lender relies on your property being available in the event you default on the loan, there can’t be any jostling for ownership of the collateral. As such, you can only use your property as collateral for one caveat loan (in addition to your home loan).

Are there any fees on these loans?

Yes – fast caveat loans come with several fees which you’ll need to account for when setting aside funds to budget for your repayments. These can include establishment fees of around 2% of your loan amount, as well as covering the cost of property valuation and legal fees which can vary between lenders, valuers and lawyers involved in the process.

Is a caveat loan the same as a second mortgage?

Not exactly – there are several ways in which a caveat loan differs from a second mortgage. Firstly, like first mortgages, you’re able to sell your home under a second mortgage and use the funds to cover your remaining loan principal, which isn’t the case with caveat loans. Additionally, caveat finance doesn’t require you to seek out permission from your lender to access further funding, whereas second mortgages do require the approval of the original mortgage holder.

Are there any costs related to paying out my loan early?

There can be costs associated with paying out your caveat loan ahead of schedule, but this isn’t always the case. There are lenders operating in the market who won’t penalise you for paying above and beyond the minimum required amount on your loan, so we can help connect you with the right lender for you who also doesn’t restrict you to sticking to a rigid pay schedule. This is also the case for unsecured business loans, with many of Savvy’s partnered lenders offering no early repayment penalties.