User:Paulstoneaustralia

WHAT IS A "CAVEAT LOAN".

A Caveat Loan is a short term loan advance, designed to be for 1 - 4 months long. They settle fast... usually within 24 hours of application. They are perfect for business people or investors who need urgent access to large sums of money of bettween $10000 to $500000. Caveat Loans need to be for a geniune business or investment purpose, and must be repaid in full by the due date. (known as an exit stretegy)

WHY WOULD SOMEONE COME TO US FOR A CAVEAT LOAN?

•	CASH FLOW CRISIS. In a real case in 2008, a plastering firm who had secured a big job, and to secure the big job the director gave 90 day terms to the project builder. The plasterer had 13 other plasterers on site working for him, and at around day 40 of 90, he ran out of money to pay wages. It was a union controlled site, so if no wages were paid, apart from having upset employees, they would be kicked off site. Payday was a Friday and he came to us on a Thursday. he got a cavet loan for $65000 over 2 months, and secured the debt against his house in Melbourne. In 2 months time, he paid it back when he got paid for the job.

•	MAXIMISE PROFITS. A doctor who needed access to $450,000 to buy medical equipment. The money she would have otherwise had to pay for this new consignment was not yet due and payable from the companies who she had sold her last consignment to. This new consignment would see her make 300% markup inside 2 months, so to pay 8.5%pm to get immediate access to the funds for 2 months was a small price to pay in order to make a large profit. She paid the loan back from the realized income from the sale of either consignment one or two, or from a refinance of her property portfolio… whichever occurs first.

•	OPPORTUNITY TOO GOOD TO MISS. An electrical goods retailer who was notified by an importer of plasma televisions that an order of 500 plasma’s had been cancelled and that the bulk shipment was now on the wharf and the first in with cash can buy the lot off price. It is a straight forward commercial transaction where a manufacturer wants to clear the cancelled order at a reduced price. The retailer stood to make 200% mark up or more if they could get their hands on this stock. The problem was the retailer did not have a spare $150,000 in clear funds. Knowing that he has less than 24 hours to raise the money or else he would miss out on the deal, he got a caveat loan and used the equity in his house to secure the loan. As the LVR was slightly over the 75% limit, the lender also took a fixed and floating charge over his company to secure the shortfall. The loan was for 2 months, and he used the proceeds from the sale of the plasma’s to repay the loan within 2 months. Yes he paid 6% per month for the money, but made 200% mark up.

•	CONSOLIDATION. A property investor who for one reason or another have fallen behind in their mortgage repayments on his investment property. In order to refinance at a competitive rate, he needed to bring his mortgage up to date. This is where a Caveat Loan comes in handy. As long as there was enough equity in the security property, he ledner was not concerned about the fact that the first mortgage was in arrears…..However in this case the lender advanced the funds on the basis that they them directly to the first mortgagee to bring the loan up to date. (in these cases caveat lenders do not advance the funds to the borrower) Had a caveat lender not have been able to assist, the client would have had some difficulty in refinancing at a competitive rate, and stood the risk of receiving a large default of his credit file, and possibly even losing the property in a mortgagee auction