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Business Loans Guide

VAT Loan

A guide to helping you understand and compare VAT business loans online

A guide to finding a competitive VAT loan

A larger than anticipated, or even an unexpected VAT bill could put your businesses finances at risk. However, there are a variety of lenders who are able to offer a competitive VAT loan, which will provide you with the funds you need to pay your HMRC bill. To help you find the ideal vat loan facility, we have compiled this detailed guide.

What is a VAT bill?

If your business is just starting out, you may be unfamiliar with the range of tax bills which your company needs to pay. Value Added Tax (VAT) is a UK tax which is applied to the sale of your services or goods. The idea is that the VAT you pay for products and services should balance out against the VAT which you charge, although this doesn’t happen very often. This is why HMRC require all VAT registered companies to supply a VAT return, so they can claim or pay their VAT.

The current UK VAT threshold is £85,000, so if your turnover is higher than this amount you will need to charge VAT. The majority of goods and services are required to charge VAT at 20%, although some things are charged at a reduced rate of 5%. There are some goods such as food, children’s clothes, books, airline tickets and newspapers which do not need to charge VAT. The specific VAT rate can vary between sectors, for example accountancy services must charge 14.5%, with construction services required to charge 9.5%.

If you are issued a VAT bill and this is not paid by the deadline or is paid late, you could be charged a high fee. However, many businesses do not expect a VAT bill and may not have the capital required to pay their bill on time. In an ideal situation the business is able to set aside funds over the course of the year to pay their VAT bill, but due to unexpected financial pressures this may not be possible. Instead, business can benefit from a VAT bridging loan.

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What are the benefits of a VAT loan?

The VAT loan definition is a loan which is designed to allow businesses to meet their VAT bill demands, while also retaining the flexibility of their working capital. Every business needs access to working capital to be able to effectively run the business, as unexpected costs can occur at any point. For example, you may need to replace a machine, purchase new stock, hire employees, or use the capital to take advantage of a new opportunity.

In most situations a VAT loan in the UK is quick to arrange and the loan documentation is designed to be simple, with the potential to E-sign the agreement. This speed is carried through to the provision of the funds, which can even be sent directly to HMRC instead of your bank account.

Our lenders understand that VAT bills can cause financial difficulty on a regular basis, so it is possible to use a VAT loan as a rolling credit facility. This will remove the requirement to save funds for an unknown VAT bill, instead you will be able to spread loan repayments across an affordable period.

What VAT loans are available?

Whatever industry you operate in, our lenders will be able to work with you to provide competitive VAT loan interest rates. Our lenders are selected based on their ability to provide flexible loans from £1,000 to £20,000,000, so you could have access to funds which can pay for VAT bills of every amount. By applying for a loan through our website, you are guaranteed to benefit from the most competitive interest rates available.

The VAT loan available to your business will be dependent on your specific situation. Here at Business Comparison, we work with a large number of lenders who specialise in providing a variety of finance forms such as VAT loans. The VAT loans available have been specifically designed to help your business effectively manage cash flow, with vat loan repayments spread over regular 3-month rolling periods, over an agreed period of time, in addition to a potential VAT loan arrangement fee.

The specific VAT loan available will depend mainly on your financial situation, which means lenders will need you to provide a range of financial documents. This could include evidence of your VAT return, bank statements, accounts and information about the directors of the business. Once these documents are analysed and your loan is approved, you could receive the funds in as little as 24 hours.

To ensure your business benefits from this fast payment and avoids the penalties for late payments, it is important to prepare these documents in advance. If the lender has all the required information, they will be able to quickly assess your application and provide an appropriate VAT loan, with terms and interest rates reflecting your unique financial situation.

The lender will decide whether the loan is high or low risk, as this will determine the type of loan offered. If your business is in a great financial position, you will be able to access unsecured VAT loans with very competitive interest rates within your VAT loan agreement.

If your business is in a poor financial situation with a low credit score, you may be offered a VAT loan, but it is likely that you will be charged a higher interest rate. By increasing the cost of the loan, the lender will recoup more of their funds quickly, which will reduce their risk.

Additionally, the lender may decide to offer you a secured VAT loan. This will require you to provide your business assets as collateral for the loan, which must match the value of the amount required. If your business does not own the assets required, it may be possible to provide a personal guarantee based on your own personal assets. If you miss repayments on the loan, the lender is able to sell these assets to recoup the money owed, which could put your property, vehicle and other valuable possessions at risk.

How to apply for a VAT loan

To find the ideal loan for your business it is important to compare the range of VAT loans available. Our finance finder tool is designed to provide you with access to a VAT loan which perfectly matches the requirements and financial situation of your business. The comparison tool is simple to use and has no impact on your credit file, with no-obligation to accept any of the loans we suggest.

The tool itself involves two stages, the first will ask you details about the loan you require. The questions will be based on information such as, the ideal loan amount, your annual turnover and how long your business has been operating. The second stage will help us narrow down the available VAT loans, by asking details about the type of business which you operate.

Once the questions are complete, we will search our panel of lenders and provide you with a list of potential VAT loans. The list will be ranked in order of how well the loan matches your businesses specific requirements. We will also display the likely interest rates and repayment periods, to make it as easy as possible for you to find the ideal VAT loan.

If you would like to find out more about the ideal company VAT loans to cover your VAT bill, please contact our experienced team today.

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