Sometimes businesses need funds fast, and traditional loans often have long approval times and onerous requirements to meet. Whether to invest in working capital, upgrade premises or facilities, purchase equipment or buy property, a second mortgage loan (or Caveat Loan) can provide money in less than a week from application to released funds.
A second mortgage loan is quick and easy to apply for and only requires the borrower to be a Pty Ltd Company and own property (residential, commercial, vacant land and located anywhere in Australia). Unlike traditional loans or mortgages, there are no credit checks, in most cases, or financials required, making them a preferable option to banks if you need money for your business quickly. They are ideal for companies trying to meet unexpected growth demands or which require a financial boost to close an investment opportunity.
Businesses can borrow up 70 (or up to 80% in some cases) of the value of a property (between $50,000-$50m) and have 1-24 months to repay the loan, at a manageable interest rate, which makes them an attractive solution for companies looking to invest in their business without delay.
For the term of the loan, there is a caveat on the borrower’s property, but it is immediately lifted on the settlement of the loan, with no ongoing restrictions on the borrower utilising the property as collateral again (straight away if required). Many borrowers find that by using their property as collateral, they can borrow more money through a second mortgage loan than via traditional channels because lenders are more confident with the added security of property.
Once the loan is secured, borrowers can get on with the business improvements or investments they had planned (and specified on applying for the loan). With no repayments due until the loan term is finalised, it provides much-needed cash flow to realise their ambitions.
However, businesses must have a clear repayment plan or exit strategy because once the loan term expires, they need to pay the total amount plus interest back in a single lump sum. Loan terms can be from 1-24 months, and before considering a second mortgage loan, businesses need to go in with their eyes wide open and a watertight strategy to ensure they can settle the loan in full at the conclusion of the agreed term.
Some exit strategies businesses might employ are to refinance existing mortgages, secure alternative finance, or sell property to release funds.
In some instances, businesses may require the loan to purchase stock or goods, with the sale of those goods being used to pay back the second mortgage loan. A business may be awaiting funds from the partial sale of the company or be awaiting the bank to release funds, however in each scenario given, there’s an obvious expectation of a lump sum large enough to cover the repayment of the second mortgage loan.
The exit strategy is critical to reducing risk to the borrower, making second mortgages a viable quick way to invest in, or grow, your business. What’s more, given there is no credit check to impact your credit rating, you can get another second mortgage loan as soon as another business investment opportunity arises (after you have paid back the first of course.)
Many mortgage brokers and accountants are not aware of second mortgage loans as short term solutions to offer business customers, especially for significant amounts of money. When borrowers have a clear business plan and exit strategy, second mortgage loans can be an excellent way to grow a business.
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August 16, 2022
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When seeking funding in the form of a loan, it is important to understand a range of key concepts that apply to lender assessed financial products.
Challenges are a daily occurrence in the world of business. More often than not, business owners mistakenly view these challenges as an obstacle rather than an opportunity.
When it comes to short term business finance, one of the most difficult tasks faced by business owners is finding the product that will best suit their needs.
If you require additional cash flow for your business or other personal reasons, using the equity in your property may be a viable option. Contrary to the thoughts of many, you can use personal real estate which has an existing mortgage as security for a loan provided there is equity available.
The world of business continues to evolve, and the lending space is no exception. There is an increasing demand for secured loans which has brought about changes in many areas.
Whether to invest in working capital, upgrade premises or facilities, purchase equipment or buy property, a second mortgage loan (or Caveat Loan) can provide money in less than a week from application to released funds.
Getting a business loan with major financial institutions such as banks can take weeks, or even months. Simply Funds has this problem by providing fast loans for business.
Securing funding through traditional lenders such as banks can be a lengthy and rather complicated process.
A low credit score is not the end of the road
Throughout the course of running a business owners are faced with difficult decisions and constant challenges. Among those are decisions relating to cash flow management, and more specifically, business finance.
Caveat loans (https://simplyfunds.com.au/blog/fast-caveat-loans/) are a financial solution for businesses, particularly useful for start-ups and commercial property investors. A caveat loan is a fast funding loan that is secured against a property. I
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A Bizcap provides both Unsecured and Secured loans to Small Business Owners. When assessing a loan application Bizcap generally doesn't take into consideration if a prospective customer has specific assets to provide as security. However:
(a) if the loan amount is above $30,000 (or any other figure which Bizcap determines from time to time), Bizcap will, under the loan agreement take a charge. For a corporate borrower and any corporate guarantor, the charge is over all of that entity's present and after-acquired property (that is. the security is not over specific assets but any and all assets which the entity may have). For a sole trader borrower and any individual guarantor, the charge is over its current and future real property; and
(b) in certain instances, for example, where the loan relative to the cash flow of the borrower is of a size that warrants the provision of security over specific assets. Bizcap may require specific security to be granted over those assets. Bizcop may register its security interest(s) under relevant legislation, including the Personal Properties Securities Register and the register held under the Real Property Act 1900 (NSW) or Its equivalent.
I n addition. Bizcap may take personal guarantees from directors of corporate borrowers, directors of corporate guarantors and certain individuals. No registrations are made in respect of guarantees.
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