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Caveat Loans

Caveat loans must be secured by property or land you own.

If you own a small or emerging business, it can often be difficult to get approval for a business loan. Many lenders will ask you to provide detailed evidence of your trading history and revenue, as well as meet strict lending criteria to be eligible for a loan.

If you're unable to access other forms of business finance and have property you can use as security, a caveat loan can give you quick access to the funding you need.

Learn how caveat loans work, what to look out for, and compare business loans below.

What is a caveat loan?

A caveat loan is a short-term business finance option that gives businesses quick access to funding. Like payday loans for individuals, caveat loans offer short turnaround times and short loan terms, but higher interest rates than regular business loans.

How do they work?

A caveat loan is a secured business loan that requires you to use your property or land as security against the loan. You can generally borrow from $1,000 to $50 million, although this will depend on the value of the property you are using as security. Most lenders will let you borrow up to a certain percentage of the value of your property, generally between 70% and 90%, although some may allow you to borrow the full value of the property.

As such, a caveat loan functions much like a second mortgage, and the lender can take ownership of the property (or the amount of equity you used as security) if you fail to repay the loan. This also means you are unable to sell the property or use it as collateral elsewhere until you have paid off this loan.

Most caveat loans are approved within one or two days, and generally offer loan terms of between 1 and 12 months. Unlike other loan types, many caveat loans charge interest on a monthly basis, and interest rates are generally much higher than other business finance options. You are generally not required to provide the documentation that is required with regular business loan applications, such as proof of income, revenue forecasts or a property valuation.

How much does a caveat loan cost?

The cost of your caveat loan is mainly determined by the loan amount, the interest rate and the loan term you are offered. Many caveat loans offer loan terms of up to one year and charge interest on a monthly basis, often from 1% per month.

Some lenders will also have a number of fees and charges that you will need to pay as part of your loan. These may include:

  • Application fees
  • Property valuation fees
  • Legal fees
  • Line fees

You should always confirm with the lender if you will need to pay any fees as part of your loan. You should also always calculate the overall cost of the loan before you apply, to ensure you find the one that is best suited to you and that you can afford to pay back.


  • Quick access to finance. Some caveat loans can be approved within one or two hours.
  • Flexible loan amounts. You can generally borrow from $1,000 to $50 million, depending on the value of your property.
  • Little documentation required. Unlike regular business loans, you do not generally need to provide evidence of your trading history and revenue or other business details.
  • High rates. Caveat loans offer higher interest rates than normal business loans. Unlike other business loans, interest is also generally calculated on a monthly basis.
  • Short loan terms. You are generally required to pay back the loan within 1 to 12 months.
  • Requires property as security. You will need to use your property as collateral against the loan in order to be eligible.
  • Higher risk. if you fail to repay the loan, the lender can take ownership of the property (or the amount of equity you used as security).

Is a caveat loan suitable for my business?

A caveat loan is often a last resort for businesses that require finance. As such, it is important that you understand the terms of the loan and are confident you will be able to repay the loan before you apply. While it may seem like an attractive option if you are struggling to secure other funding, a caveat loan is generally only suitable if you meet the following criteria:

  • You have property or land to use as security against the loan.
  • You need quick access to funds and are ineligible for other forms of business finance.
  • You will be able to repay the loan in time.

If you do not meet all of the criteria above, a caveat loan may not be an appropriate choice for your business.

Compare business loans

Before applying for a caveat loan, you should determine if you may be eligible for a regular business loan, as these loans generally offer more flexible loan terms and lower interest rates. You can compare a range of business loans below.

Lumi Unsecured Business Loan

Lumi Unsecured Business Loan

  • Fast approval
  • No early repayment fees
  • Short loan terms
Security Logo

100% confidential application

Lumi Unsecured Business Loan

Borrow up to $500,000 with an unsecured business loan from Lumi.

  • Interest rate type: Variable
  • Interest rate: from 15% p.a. to 26% p.a.
  • Comparison rate: from 15.64% p.a. to 52.14% p.a.
  • Establishment fee: 2.5%
  • Minimum loan amount: $5,000
  • Maximum loan amount: $500,000
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Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Lumi Unsecured Business Loan
3 months to 5 years
2.5% establishment fee
Apply for up to $500,000 from Lumi and benefit from short loan terms, no early repayment fees and once approved receive your funds in just one business day.
Valiant Finance Business Loan Broker
3 months to 7 years
$0 application fee
A Business Lending Specialist from Valiant Finance can give you access to competitive business loans from over 80 lenders. Loans between $5,000 and $20 million are available. Request a call – your loan can be funded in 1 business day.
ebroker Business Loan
1 month to 30 years
$0 application fee
Small business loans available between $5,000 and $5,000,000. Get access to 70+ non-bank lenders on this independent platform.
ScotPac Boost Business Loan
3 months to 3 years
$0 application fee
A business loan for any industry. Borrow between $10,000 and $500,000, with approved loans funded within 24 hours. Minimum monthly turnover of $10,000 and 1 year of trading history required.
Prospa Business Loan
3 months to 3 years
3.5% origination fee
Small business loans are available from $5,000 - $500,000 on terms of up to 3 years. At least six months trading history and a monthly turnover from $5,000 is necessary.

If your business is struggling to manage its cash flow, invoice financing could be an option. This type of business loan is secured by outstanding invoices and comes with reduced risk, no asset requirements or interest payments. You can compare the invoice financing products below.

Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
ScotPac Invoice Finance
From 1 year
No set amount
Improve your business cash flow by financing your outstanding invoices. No minimum trading history required, but minimum 12 - month term and $10,000 in invoices.
ScotPac Selective Invoice Finance
1 to 3 months
Finance your unpaid invoices on demand with terms of 1 - 3 months. 95% of invoice is paid upfront, with no minimum trading history required.

Finder survey: How many Australians have used a caveat loan?

Source: Finder survey by Pure Profile of 1145 Australians, December 2023

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Written by

Thomas Stelzer

Tom Stelzer is a publisher and writer for Finder, covering investing and cryptocurrency. He previously worked for Finder as a writer in Australia and the UK, covering things like personal finance, loans, investing, insurance as well as small business and business loans. He has a Master of Media Arts and Production and Bachelor of Communications in Journalism from the University of Technology Sydney. See full profile

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