How they differ, in one sentence
This is the cleanest way to remember the difference between caveat loans and asset-based lending.
Caveat loan: "I own a property, I'll put it at risk to get cash."
Asset-based lending: "I own business or personal moveable assets, I'll use them as security for short-term funding."
A caveat loan is a property-security tool. Asset-based lending is a moveable-asset tool. Both unlock cash from something you already own, but they work against different asset classes and on different timelines.
In a caveat loan, the lender registers a caveat against the title of real property you own. The caveat protects the lender's interest if the property is sold; the borrower keeps living in or using the property while the loan is active. If you can't repay, the lender can apply to court to remove the caveat and then enforce their security by forcing a sale.
In asset-based lending, the lender takes security against moveable assets like vehicles, machinery, equipment, or inventory. The asset can stay with you (with GPS tracking) or be stored with the lender. The loan term is short and the exit is clear: repay and get the asset back, or the asset is sold to clear the debt.
Both products unlock liquidity from existing assets. The choice between them usually comes down to: what security can you offer, and how fast do you need the cash?
What a caveat loan actually means
A caveat loan is short to medium-term lending secured by registering a caveat on the title to real property you own. The caveat acts as a "notice of interest" on the property register, protecting the lender's position if the property is sold.
How caveat loans work
When you take out a caveat loan, the lender's solicitor lodges a caveat with the relevant land titles office (LTO). The caveat shows that the lender has an interest in the property. While the caveat is registered, the property cannot be sold without the lender's consent or a court order removing the caveat. The borrower continues to own and use the property; the caveat is purely a protective mechanism for the lender.
Terms and costs
Caveat loans typically run for 2 to 10 years, though shorter terms (6 to 12 months) exist for bridge situations. Interest rates are typically higher than traditional mortgages because caveat loans are short-term, less regulated, and carry higher risk. Costs include the caveat lodgement fee (paid to the land titles office), the lender's legal fees, and the interest itself.
Security requirements
The property must have sufficient equity to support the loan. If you have an existing mortgage of $300K on a property worth $500K, you have $200K in equity available. A caveat lender will typically lend up to 80% of the equity (so $160K in this example). The equity must be real and documentable; lenders typically order a valuation.
Personal liability
This is the critical point: caveat loans typically carry full personal liability. If you default and the lender forces a sale of the property but the sale price is less than the outstanding loan, you remain personally liable for the shortfall. This is different from some other secured products where the security is non-recourse.
What asset-based lending actually means
Asset-based lending is short-term commercial finance where the borrower owns moveable assets and uses them as security for funding. The assets can be vehicles, machinery, equipment, inventory, art, or gold. No credit checks and no financials are required; the asset valuation is the assessment.
How asset-based lending works
When you take out an asset-based loan against a truck, for example, you tell ABL about the truck, we value it, we issue an indicative term sheet within 2 hours, and we settle the same day once the security is in place. The truck can either stay with you (we fit a GPS tracker, you keep driving, we track it) or come to us for storage. The loan term is short, typically 1 to 9 months. At the end, you repay and get the asset back, or we sell the asset and use the proceeds to clear the debt.
Three security structures
ABL offers three ways to structure the security depending on what the asset needs to do while the loan is active:
- Park It — asset is stored with ABL until repaid
- Track It — asset stays in service with you, ABL tracks via GPS
- Sell It — ABL advances against imminent sale, sale proceeds repay the loan
No property security
ABL does not lend against property. We lend against moveable assets only — assets we can park, track, or sell against. That includes vehicles, machinery, equipment, inventory, gold, watches, art and collectibles, whether owned by the business or by a director personally. If you own property but don't have moveable assets to secure against, a caveat loan is the relevant product. If you do have moveable assets, asset-based lending is typically faster and more straightforward.
Side-by-side comparison
The practical differences across the key dimensions:
| Caveat loan | Asset-based lending | |
|---|---|---|
| Security type | Real property (land or buildings) | Moveable assets (vehicles, equipment, etc.) |
| Registration process | Caveat lodged on title register | Security agreement, no title registration |
| Typical term | 2 to 10 years | 1 to 9 months |
| Time to funding | 3 to 10 business days | Same day (once asset secured) |
| Credit check | Usually yes | No |
| Financials required | Usually yes | No |
| Personal liability | Usually full recourse | Limited (asset-secured) |
| Use of security during loan | Property remains with borrower | Asset with borrower (tracked) or stored |
| Best for | Longer-term needs, property owners | Time-critical needs, asset owners |
The two products serve different borrower situations. A business with property but no equipment would look at caveat loans. A business with equipment but facing a tight deadline would look at asset-based lending.
Real scenarios: which would you choose?
Property settlement in 6 weeks, need $200K now for the next acquisition
A property developer owns a house worth $600K with a $300K mortgage. They have identified the next property they want to acquire and need $200K immediately for deposit and stamp duty. Settlement of the first property happens in 6 weeks, which will clear the current mortgage and release the equity.
Caveat loan or asset-based lending? Caveat loan. The developer needs a medium-term bridge (6 weeks) against real property. They have clear equity in the property, a clear exit (the settlement), and time to complete the caveat registration. A caveat loan is the traditional product for this use case.
Manufacturing business, need $80K for urgent supplier payment, own fleet of trucks and machinery
A manufacturing business has $150K worth of trucks and machinery on the books, all owned outright. A supplier is demanding payment of $80K in 48 hours or they'll stop supplying. The business can't wait for a traditional loan approval. They own property too, but it has a mortgage and the equity tie-up would take time.
Caveat loan or asset-based lending? Asset-based lending. The business needs same-day funding against equipment they already own. Asset-based lending can settle in 24 hours once the machinery is valued and secured. A caveat loan, even if property equity were available, would take days to arrange. Track It keeps the machinery in service while the loan runs, and the short term (likely 1 to 3 months) matches the business's cash timeline.
ATO garnishee action imminent, need to clear $45K in one week, own property
A sole trader has received notice of a garnishee application. They have 7 days to clear a $45K tax debt or the ATO will issue the garnishee. The trader owns a rental property worth $450K with a $250K mortgage, giving them $200K in equity. They own very little equipment (just a laptop and office furniture).
Caveat loan or asset-based lending? Caveat loan. The trader has property equity but minimal equipment. A caveat loan can be arranged within a week; asset-based lending would be impossible because the trader has no moveable assets to borrow against. The caveat loan structure (even though it's usually longer-term) can be negotiated for shorter terms in urgent situations, and the 7-day timeline is realistic for a caveat lender to move.
Why ABL doesn't lend against property
Asset-based lending is deliberately structured around moveable assets. There are several reasons why property doesn't fit the ABL model:
Registration and complexity
Registering security against property requires lodging with a land titles office, which takes time and legal work. Asset-based lending's speed comes partly from avoiding this bureaucratic layer. Moveable assets can be secured via a simple security agreement without title office involvement.
Enforcement and realisation
If you default on an asset-based loan and we need to realise the security, we can sell equipment or vehicles relatively quickly (typically within weeks). Selling property requires court orders, marketing time, and months of process. ABL's short-term loan structure depends on being able to turn the security into cash fast if needed.
Storage and tracking
With moveable assets, we have three options: store it, track it remotely via GPS, or hold it at a third-party facility. None of those work with real property. The property stays with you, which means enforcement options are more limited if repayment doesn't happen.
Personal liability and equity risk
Caveat loans typically require full personal recourse. Asset-based lending is typically non-recourse or limited recourse (the asset is the security, and if the asset sale doesn't cover the debt, you don't owe the difference). This different liability structure is tied to the asset class and term.
For property security, caveat loans are the established product in Australia, and they work well for their intended use case. ABL is complementary to caveat lending, not a replacement for it.