If you have an upcoming vat bill and your cash flow is short, a vat loan could help ease the process for your business.
When a business charges Value added tax (VAT) on its sales or incurs it on their purchases, it will pay the balance to HMRC on a regular basis, typically quarterly or monthly. VAT is a legal requirement for UK businesses and if you fail to pay it, you will receive penalty fees.
A VAT loan is a specific type of financing designed to help businesses delay their payments to HMRC or speed up VAT refunds to ease working capital. When cash flow issues prevent a business from paying VAT on time, a VAT loan provides the necessary funds to meet these obligations without disrupting your other business operations.
Some VAT loan lenders work by paying HMRC directly on behalf of your business once your loan is approved. Other VAT loan lenders will provide your business with a loan equivalent to the amount of VAT due. In both of these circumstances, the loan is then repaid over time back to the lender. The repayment includes the principal loan amount plus any interest accrued over the agreed repayment period.
Yes, there are different types of VAT loans which can be helpful for different business needs and industries. Here’s an overview of the different types of VAT loans you might be able to access:
Some lenders offer financing solutions that allow businesses to spread their VAT and corporation tax payments over monthly instalments, easing the burden of larger quarterly or annual payments.
VAT bridging loans act as a short term finance solution. This loan will help to bridge a cash flow gap that your business might have, enabling you to pay your VAT bill on time.
After you submit a VAT return, it can take HMRC up to 30 days to process your VAT refund. These delays could cause a strain on your business’ cash flow whilst you’re waiting to receive cash that you’re owed. Through our partnership with Adsum, Capitalise offers an option where businesses can receive a VAT refund payment within just 60 minutes. As an approved HMRC agent, all you need to do is connect your HMRC account and you’ll receive the funds in your account as soon as your VAT return is verified.
Say goodbye to waiting days for your VAT refund.
Get your VAT refund within 60 mins, with our partner Adsum
To calculate your VAT bill, you’ll need to add up the VAT you've charged on your sales and subtract any VAT you've paid on your own purchases. The result is what you report and pay to HMRC. It’s important to keep accurate records to make sure you calculate this correctly.
If the sum is a positive amount, then you’ll need to pay that amount to HMRC. IF the sum is negative, HMRC will refund you the amount.
The amount you can borrow usually depends on how much VAT you owe, however lenders will also consider factors surrounding your business's financial health.
For example they will take into consideration your business credit score and your business’ revenue to decide how much they can lend you.
You can use our business loan calculator to get an estimate of how much your repayments each month could be. Or you can start a funding search with Capitalise to see how much you could be eligible to borrow.
To be eligible for a VAT loan, you’ll need to met the following criteria:
Depending on the specific lender, you might also need to have a good business credit score and a minimum monthly turnover.
Don’t put off paying your vat bill due to a cash flow shortage.
Apply for a vat loan with Capitalise and you could get funding in as little as 1 hour.
If your VAT payment is more than 15 days overdue, your business will receive late payment penalties. The sooner you pay your VAT bill, the less late payment penalties will apply. You can find out more about late payment penalties.
As with any business loan, the amount you can borrow for a VAT loan will depend on a number of factors, including your business credit score and turnover.
Use our funding calculator to see how much you can borrow for a VAT loan.
VAT bills are usually paid every quarter of the year, so VAT loans tend to be short term 3-12 months. You could get a VAT loan every 3 months if your business is in good standing.
A VAT bridging loan can be used if a business needs to “bridge the gap” and cover the cost of their VAT bill if cashflow is tight. It is a fast and short term finance solution.
Login to your Capitalise account and tell us about your fudning requirements for a VAT loan. A funding specialist will give you 1-1 support and send your application up to 4 lenders that are most likely to approve your business. You could receive a VAT loan in as little as 48 hours.
