Are you planning to launch a new business but you don’t have sufficient funds to support it? Don’t let your finances or the lack thereof ruin a potentially promising venture. If you are struggling to get a business loan you may benefit from a caveat loan.
You see, not everyone who applies for a business loan gets approved and majority of lenders require that you provide complete documents detailing your revenue and your trading history. They also have strict rules and a set of criteria that they use to screen applicants. If you fail to pass their criteria and submit all requirements you may not be granted a business loan. Assuming all your applications were denied, does that mean you won’t be able to start a business? You can still get the funding you need as long as you have a property or an asset you can use as a security. If this is the only thing you have then you can qualify for a caveat loan. Let’s understand what a caveat loan and how your business van benefit from it:
How Do You Explain A Caveat Loan?
Business owners who are in dire need of fast cash could benefit from a caveat loan, which is a type of short-term loan. This loan grants immediate access to funds. They work quite similar to payday loans. They have quick turnaround times. However, compared to business loans, their interest rates are quite high.
How Does A Caveat Loan Work?
Anyone who has a piece of land or property can qualify for a caveat loan since this is one of its major requirements. Applicants of caveat loans can borrow thousands to millions of dollars depending on your property’s value, which you will use a form of security. Most lenders restrict the amount of money they are allowed to loan. They usually base it on a certain percentage of your property’s value. Usually the range is 70 to 90%. However, there are also lenders that allow applicants to borrow 100% of their property’s value.
You can think of a caveat loan as a second mortgage wherein the lender is going to assume ownership of your security (land or property) if you are not able to repay the amount you loaned. In such case, you are not allowed to sell your property or utilize it as a collateral until such time you pay off your caveat loan.
How Long Do You Have to Wait for Approval?
When it’s fast cash you need, this is the loan for you since caveat loans can get approved in as fast as 24-48 hours! The loan terms they offer can range between one month and a year. However, compared to other financing options, a caveat loan will charge an interest fee every month and the downside is that the interest rates are relatively higher. The requirements for a caveat loan are not as strict as other business financing options where you will be required to provide property valuation, revenue forecasts and proof of income.
How Much Will This Cost?
Basically, the cost of your loan is based on your loan amount, the loan term that was given to you and the interest rate of your loan. Most caveat loans can provide up to a year of loan terms but charge a monthly rate and an interest of 1% every month. There are also lenders who charge additional fees for legal, application, line and property valuation fees.
Before you commit to a lender make sure you ask about any additional fees. It is also important that you compute the total cost of your loan before applying so that you can determine if it’s the right loan for you and if you are capable of repaying the loan.
Don’t let your dreams dissipate just because you don’t have sufficient funding. There are always ways if you look for them.