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The Evergrowing Demand for VAT Lending

It has been a tricky decade for businesses in the UK.

With the pandemic forcing many companies to close their doors, and an economy that has teetered on the edge of breaking point at times, many owners have found it a struggle to get things moving the way they would like.

2023 looks to be a turning point though.

We heard from one of our trusted lenders recently, who has seen an upturn of 83% in VAT lending this year compared to the last.

That’s a huge rise and a good indication that things are on the up for many UK businesses.

This also aligns with the fact that total VAT receipts in the financial year ending March 2022 was showing a big rise of 55% and more statistics can be found on the government VAT statistics page.

VAT lending is a great way for a business to access funds quickly to pay off any outstanding VAT they owe the government and pay it off in installments, allowing them to free up cash flow and boost their finances immediately (within 48 hours if you apply with us).

Here at Smart Funding Solutions, we want to provide the right loan at the right time to a business that needs it, and we’ve created this guide on VAT loans just in case this is the right choice for you.

Let’s take a look.

tax forms

What is VAT Lending?

VAT lending is a type of loan that allows a business to gain access to funds to immediately pay off money owed to HMRC.

This figure is normally sent directly to the government.

This works really well for businesses that don’t always have a steady flow of income. For example, if you are constantly carrying out long jobs where you charge for VAT but don’t receive payment for months, you could need an injection of cash to help pay what you owe without having to dip into your savings.

It’s not always easy for businesses (especially small ones) to pay off large figures in a lump sum.

If you submit your VAT figures quarterly like most businesses, this could happen every three months which could put a strain on your finances.

This is why many companies opt to loan their VAT payments, and then pay it back on their own terms and in their own time.

Why is it Growing in Popularity?

A positive reason that VAT lending is growing in usage is that more businesses are needing the funds to grow.

Many business owners have now come out of the other side of the pandemic lockdowns and subsequent economic turmoil and are now ready to build their businesses back up and achieve their goals.

With more aspirations for growth, more working capital is needed, and having this boost to cash flow available is a good sign that things are looking up.

graph helping to calculate tax

Benefits of VAT Loans

There are many benefits for businesses looking to take out a VAT loan, and here are three key ones.

They Can Help When Funds are Required

There are many reasons that a business may need an influx of funds.

Whether you need cash to get you out of a tricky financial situation, or you simply have spent money already on an operation that needs more payments to complete, a large payment to the government can make this tough.

A VAT loan can help to bridge the gap in this instance, taking care of the money you owe to the government and allowing you to pay it back in installments once you have paid what you need for your business.

This is ideal for businesses who may suffer from seasonal drops in sales and have less money at certain points of the year.

Business Growth

One of the key things that holds a business back in its plans to expand is money.

In many cases, business growth costs money. Whether it is moving to a bigger office, manufacturing more goods, or taking on more staff, all of this can add to the negative side of your cash flow.

If you are looking to scale your business and can’t find the money to do so in between large VAT payments, then taking out a loan can provide you with what you need.

This can be a big boost in paving the way for your business to take on new ventures and really forge its way ahead in its industry.

Peace of Mind

Owning a business isn’t easy.

There are many different things that can cause stress and worry, and one of the biggest causes of this is money.

If your business is running low on cash and you get hit with a VAT payment, then this can really affect you and your business.

In this case, a VAT loan can set your mind at ease as you can make sure the payment is taken care of, and you can pay it off in your own time and on chosen terms.

This is a great way of giving yourself some space and allowing you to ease the burden of your business finances from your mind.

lady on laptop working out taxes

Our VAT Loan Calculator

If you’ve read the above and think a VAT loan may be perfect for you in your business situation, then why not head over to our calculator page, where you can quickly get an estimate of your loan terms, and how much you will pay back in total and per month.

This is a great way of deciding if this loan would work for you and seeing if it is a feasible option in terms of monthly payments.

Smart Funding Solutions

Once you’ve done the calculator and you still want to proceed, then get in touch with our team.

We can have you set up and the funds on the way in 48 hours, providing you with all of the benefits above and more.

We hand out many loans every year to help businesses pay their VAT, and you could be next.

Complete our online VAT indicative terms and we’ll come back to you within 24 hours with a potential solution to your VAT funding needs.

Find everything you need on our VAT financing application page here.

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