What is a caveat?
A caveat is a notice on a property's title that someone else has an interest in it. While it's there, the owner can't sell or transfer the property. A caveat lender lodges one as its security, and removes it once the loan is repaid.
How caveat loans work
Caveat loans are short, often a few weeks to a year, and can be approved within a day or two because the property secures them. They're for business purposes only, and are often used to bridge a gap, such as waiting on a sale, a payment or longer-term finance.
You'll usually need proof of identity and property ownership, details of the equity in the property, and a clear plan for how you'll repay.
What they cost
Rates are much higher than on a standard business loan, and there are usually application, valuation, legal and sometimes exit fees on top. Add up every cost over the time you'll need the money before you sign.
The risks
If you can't repay on time, costs can climb quickly and the lender can take action against the property. As business lending, caveat loans aren't covered by responsible lending rules. Get independent legal and financial advice first, and compare a secured business loan or line of credit, which is usually cheaper if you have time to arrange it.