Understanding caveat loans, mortgage financing and personal property secured loans

As a small business owner you understand how important it is to act fast when you see a new opportunity. Whether you want to hire more staff, take on new premises or equipment or acquire extra stock, sometimes you need extra cash, fast.

Our current blog series aims to help you understand your short term small business loan options. Let’s now take a detailed look at caveat loans, mortgage financing and personal property secured loans.

Caveat financing

  • If you own some residential or commercial real estate, such as your home or business premises, you can use it to secure a loan against the value of your property.
  • When a lender agrees to loan you some business funds, you lodge a caveat against the title deed to your property.
  • This caveat provides security for the loan and indicates that the lender has a registered financial interest in the property.
  • A caveat prevents any other dealings on the property until the loan is repaid.
  • A caveat doesn’t allow the lender to sell your property if you don’t meet your repayments. However it provides them with an equitable interest in it and serves to indicate that the property has been used as security.

Mortgage financing

  • Another way to secure business finance if you own property is through mortgage financing. This is the most popular business finance option in Australia.
  • Similar to caveat financing, once a lender agrees to loan your small business funds, you provide your property as security for the loan. The lender then lodges their interest on a mortgage against the title deed to the property.
  • The difference between caveat and mortgage financing is that with mortgage financing, if your small business fails to meet your loan repayments the lender is able to put your property up for sale.
  • An advantage of mortgage financing is that you can employ this option with more than one lender. When you take out a second mortgage against a property, the second lender is ranked as second in line in terms of having a financial claim against your property.

Personal property security secured loans

  • If you don’t own property but do have other assets, there is another secured small business finance option available to you.
  • A personal property security secured loan enables to provide an asset such as a vehicle, boat or machinery as security for your small business loan.
  • The lender registers their financial interest in your asset on the Personal Property Security Register. It allows the lender to make a claim on your asset if you fail to make your small business loan repayments.
  • You can only use an asset that you own outright, and that has no other debt or security obligations relating to it.
  • A personal property security secured loan can be a quick, easy and convenient small business finance option.

Need another option for a quick cash injection for your small business?

  • Of course, not all small business owners have assets like these to offer as security.
  • For information on how your small business can access fast, unsecured and hassle-free finance, talk to us at Limba.
  • We understand small business and its challenges. If you haven’t been trading for long or need a cash injection quickly, getting support from the big banks can be tough.
  • Unlike the big banks, we want to make like easier for small business! We can provide easy access to additional cash flow and offer unsecured business loans up to $10,000.

Let us help your small business build and grow

  • City Finance Business Lending can offer your small business an obligation free quote for your business finance needs. During business hours, we’ll email you a quote within an hour!
  • Limba also offers your small business:
    • a streamlined application process
    • a Business Specialist to assess your needs and guide you through the application process
    • fast approval and next day funding
    • no hidden fees
    • easy weekly, fortnightly or monthly direct debit repayments

Applying is easy!

The application form only takes approximately five minutes to complete.

  • Our friendly Business Specialists will call and assess your needs, advise you of the outcome of your application and recommend a suitable repayment schedule.
  • Funds can then be in your account the next business day!
  • Call 1300 10 10 77, or email us at business@limbaloans.com.au.
  • You can also apply online today!