Glossary
Caveat loan
Very fast, very short-term lending secured by a caveat over property. Among the most expensive debt a business can carry.
In plain English
A caveat loan is secured by lodging a caveat over the borrower's property, a legal notice that blocks dealings with the title until the lender is paid. Approval can take days, terms are usually measured in months, and pricing is often quoted monthly rather than annually, which conceals just how expensive it is.
It is bridging money for genuine emergencies with a defined exit. Carried longer than a few months, or rolled from one caveat lender to the next, it consumes a business's margin faster than almost any operational problem could.
Why a lender cares
Caveat funding on a file reads to mainstream credit as distress, which makes the eventual refinance harder still. If the underlying business actually services, the better answer is usually a properly built case to a mainstream lender, and if it does not service, the caveat loan is buying time the numbers say you do not have. Either way, the numbers first.
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