Exit Strategy Term:
Exit strategy is a term used widely, and often these days in the financial sector. The royal commission has had, and continues to have an impact on lending for all types of finance needs. Though exit strategies may seem like a new consideration, they are widely used and fundamental to business finance, especially short term lending.
What is exit strategy?
Traditional finance uses a wide range of lender policies to ensure a consumer doesn't enter a loan contract that will put them into undue hardship. These policies are for a range of lender assessment needs such as income and servicing, security, expenses, credit history etc.
However, with certain forms of finance you may not have a need for some of the criteria and policies when there is a sunset clause for a loan and a clear method is presented on how the loan will be paid back. This clear method of paying the loan back in full is called an exit strategy.
Caveat Loans and types of exit strategy:
There are a number of types of exit strategy which are preferred for caveat loans and short term finance. As the strength of the exit strategy increases, inversely the risk decreases to the borrower. Here are a few examples of strong exit strategies.
There are many reasons why caveat loans might be required. Caveat loans can provide fantastic opportunities to grow a business for example. Like all forms of finance, the use needs to fit the requirement. This includes a sensible and financially viable exit strategy. Loan Saver Network are experts in caveat loan solutions. Call us today on 1300 796 850 for a free business finance assessment.