Fast property-secured loans for stock and supplier payments

Stock and supplier problems have a way of arriving with a very short fuse. A supplier offers a big discount for payment this week. A container lands and won’t be released until freight and duty are paid. A key trade account is overdue and the supplier is about to put you on stop. Each of these can be solved with money in days, and each costs far more if it isn’t.

When does a caveat loan suit stock or supplier payments?

A caveat loan tends to fit when:

• The amount is significant — larger than your turnover would support on an unsecured basis.
• Recent trading is uneven — the very dip that created the cash squeeze makes unsecured lenders cautious.
• The deadline is days away.
• The stock turns into cash within a few months, giving a clear exit.

It doesn’t fit so well when you need ongoing, revolving stock funding, or when the margin on the stock won’t cover the loan’s cost.

How does it compare with other options?

Option	Speed	Typical size	Security	Best for
Caveat loan	Fast; same day possible for $20k–$250k	$20k – $5m	Property	Larger, one-off, time-critical purchases
Unsecured business loan	Fast; same day possible for smaller amounts	Typically $5k – $500k	None (sized on turnover and statements)	Smaller amounts with steady trading
Line of credit	Fast once set up	Varies	Varies	Recurring stock cycles
Trade or supplier finance	Depends	Varies	Often the goods themselves, registered on the PPSR	Importers with regular orders

Security over goods and equipment is registered on the Personal Property Securities Register, which covers property other than land. Property equity sits on the land title instead, which is what a caveat loan uses. More on the difference on caveat loan alternatives.

How should you size the loan?

Work out three numbers:

1. Cash needed — the invoice, freight, duty and any GST due on import.
2. Loan cost — the total cost of finance in dollars (see caveat loan costs).
3. Benefit — the discount captured, or the gross margin on selling the stock, or the cost of losing supply.

If the benefit comfortably exceeds the loan cost, and the stock will sell within the term, the numbers work.

Illustrative example

Illustrative only.

A Hobart homewares retailer is offered a supplier’s end-of-line stock at a large discount — $85,000 for goods it would normally pay far more for — if paid within five days. The owner’s home is worth about $690,000 with $330,000 owing. A $92,000 caveat loan including costs brings the combined LVR to about 61%. The retailer expects to sell most of the stock over the Christmas period, and chooses a four-month term. The discount captured is well above the loan cost, and the loan is repaid from January sales.

Checking whether a supplier deal stacks up? Run it through the Feasibility Checker, or get a specialist to size it.

What about paying an overdue trade account?

If a supplier is about to stop supply, clearing the account can protect the business. But be clear-eyed about why it fell overdue. If it’s a timing gap — a big customer paying late — a short caveat loan bridges it well. If the business has been losing money, a loan only postpones the problem. Our exit strategy page helps you test which one it is.

How do you protect the payment itself?

Invoice fraud targets exactly this moment: a large, urgent payment to a supplier. Before funds are sent:

• verify the supplier’s bank details by phone using a number you already have;
• be suspicious of any last-minute change in account details; and
• confirm the amount against the original quote or purchase order.

We’ll pay the supplier directly if you prefer, but we still rely on bank details being right.

What’s different when you’re importing?

Imported stock adds timing layers that local purchases don’t have:

• Supplier payment is often due before shipping, weeks before the goods arrive.
• Freight and port charges are payable before release.
• Customs duty and GST on imports may need to be paid before the goods can be collected.
• Currency movements can change the amount you need between order and payment.

A caveat loan can cover one or several of these steps, with the exit being sale of the goods once they’re on your shelves or delivered to customers. Build the full landed cost into the loan amount, not just the supplier invoice, and allow for shipping delays in the term. If you import regularly, it’s worth talking about a longer-term trade facility as well; a caveat loan is best for the one-off or unusually large order.

Supplier deadline looming? Let’s check the numbers

Tell us what you’re buying, from whom, how much and by when — and how the stock turns back into cash.

It takes about 60 seconds, and there’s no credit check just for enquiring. Your details aren’t parcelled out to a group of lenders; a specialist reads them and calls. Accurate figures for the invoice and your property make the answer quick and reliable.

Fund the supplier payment →