Can I Still Get A Loan Without Selling My Assets?
3 May 2021 | 4 min
If you are a business owner or have your own property, then a caveat loan may be an option to meeting your financial needs. Essentially, it’s like having a second mortgage, except for the short term. The loan is secured by using your business or property as collateral.
The advantage of this type of loan is that it provides a quicker means of approval.
What is a business caveat loan?
Let us have a deeper understanding of what is a business caveat loan. Refers to a short-term commercial loan that helps to provide your business with the funding it needs.
Most lenders have a turnaround time between 24-48hrs after the application submission. One of the most attractive features of this loan is that it’s not required for borrowers to have a good credit score to be approved.
The amount you can borrow is based on the available assets you currently have, which can be used as a form of security for the loan.
Compared with traditional commercial loans, they have a faster approval time but with a higher interest rate included. As your business or property is used as a security/guarantee for the loan, the approval of the application is generally faster.
When to use a business caveat loan?
Whether you are looking to expand or rebrand your business for the future, you may be interested in borrowing a short-term loan to grow your business. It is worth noting that you should also consider how you plan to make your repayments in a short period of time.
Features of business caveat loan
It’s crucial to understand the key features that is attached to a caveat loan before you apply for one.
When to choose a business caveat loan?
Being a small-time business owner, you might often find it difficult to meet the lending criteria for traditional commercial loans. That is why a business caveat loan might be suitable for your financial situation.
When applying for commercial financing, limited evidence of income or revenue forecasts can act as the main obstacle when applying for a business loan. Borrowers who can use their property as collateral can benefit from using a business caveat loan to provide a quick form of cash flow.
Before applying for this type of loan, it’s important to factor in the high interest rates included and why your financial situation falls into one of the following categories:
- You cannot obtain other forms of commercial financing
- The business has been operating for less than 2 years
- You have enough property to use as collateral
Business caveat loans can be used for legitimate business purposes including, managing your daily operations, purchasing inventory or further development of your business.
Fees included with a business caveat loan
The interest rates of business caveat loans are generally higher than other commercial loans. As a short-term financing solution, loans usually charge monthly interest, as opposed to your traditional annual interest.
Additional fees may also include:
- Application fee
- Legal fees
- Credit line fee
- Property valuation fee
It is important to compare business caveat loans offered by different lenders, you need to consider any initial or ongoing fees such as property valuations or monthly fees before applying. To ensure you fully understand the total costs for your loan and that you can make the repayments on time.
What do I need to provide for the application?
Applying for a business caveat loan is simple and requires less documentation than your standard commercial loan.
Since the loan amount is entirely based on the borrower’s available assets, the lender only needs to assess the value of the property to determine whether your eligible to apply.
To apply for a business caveat loan, the borrower needs to provide the following information:
The lender can usually approve the application within two hours. If your application is approved, the funds can be transferred to you within 24 hours.
You can apply for a business caveat loan through Abacus Finance today. If you have any questions regarding commercial loans, or any other type of loan please feel free to contact us. Our team of lending specialists will help to assess your financial situation and provide you with expert advice.
The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.