Pay your quarterly VAT bill in full and repay over the following months. How VAT loans work, what lenders check, the costs and when Time to Pay fits better.
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In short
You avoid HMRC late payment penalties on that bill, but the debt moves to the lender with interest and fees on top. Compare that cost with an HMRC Time to Pay arrangement before deciding.
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About vat loans
You then repay the lender over a short period, usually in monthly instalments timed to finish before your next VAT bill is due. It is for VAT-registered businesses whose quarterly payment lands at the same time as payroll, stock purchases or a quiet trading month.
Smart Funding Solutions is a whole-of-market broker: we find lenders that fund VAT liabilities and approach those suited to your business. VAT loans are one part of our HMRC loans range, which also covers corporation tax and self-assessment.
Not ready for the full application? Leave a few details and a broker will call you to talk it through. It is free, with no obligation.
A transaction we arranged
£17,125.87
VAT funding renewed for a law firm.
Rather than pay its VAT bill straight out of operating cash, a law firm spreads it, and has renewed the facility with us.
Read the transaction
Because VAT falls due regularly, some businesses arrange a VAT loan each quarter, and some lenders offer revolving facilities that can be drawn on each time a bill is due. Our VAT calculator helps you work out VAT on sales and purchases.
If you repay a VAT loan over three months, it is cleared just as the next quarter's bill arrives. If you stretch it longer, the monthly cost falls, but you may still be repaying one quarter's VAT when the next is due. Map both on your cash flow forecast before choosing a term.
A VAT loan costs interest and possibly an arrangement fee on top of your VAT bill. The cost depends on the lender, amount, term and your credit profile. Compare the total cost with the penalties and interest you would face from HMRC, and with HMRC's own options. Check whether early repayment is allowed and whether any charges apply.
Send us your VAT return, recent bank statements and latest accounts. We check which lenders fund VAT, approach those that fit, and go through the repayment terms with you. Decisions can come within a few working days once a lender has everything it needs, and funds can follow shortly after signing, so apply well before your payment deadline. It is free to enquire, and any broker fee is disclosed separately before you proceed. Start with our VAT funding application.
A UK VAT-registered business with a trading history.
Your VAT return or HMRC statement showing the amount due.
Recent business bank statements and accounts.
Business and director credit profile.
Affordability: whether you can repay the loan and still meet the next VAT bill.
Your VAT payment record: whether previous quarters were paid on time, and any existing HMRC arrears or payment plans, which some lenders treat cautiously.
Directors are usually asked for a personal guarantee; security over property is not normally needed.
How the main business finance structures work. Lenders set their own terms, so treat this as a guide to the questions to ask.
| Option | How you repay | Security | Often used for |
|---|---|---|---|
| Unsecured business loan | Fixed instalments, usually monthly | No charge over assets; a personal guarantee is usually required | Growth, stock, tax bills and cash flow |
| Secured business loan | Fixed instalments, often over a longer term | A charge over property or other assets | Larger sums, property and refinancing |
| Revolving credit facility | Interest on what you draw; repay and redraw | Varies by lender and case | Recurring or uneven cash flow gaps |
| Merchant cash advance | A share of future card takings | No charge over assets | Card-taking businesses with uneven months |
| Asset finance | Regular payments over the life of the asset | The asset being financed | Equipment, vehicles and machinery |
| Invoice finance | Settled as customers pay their invoices | Your unpaid invoices | Businesses waiting on customer payment |
General information only. Every lender has its own criteria, and all finance is subject to status.
Illustrative figures from the numbers you enter, before you speak to a lender.
It depends. Time to Pay is an instalment plan agreed directly with HMRC, with interest charged, and HMRC decides whether to agree it. A VAT loan pays HMRC in full, so your account stays up to date, but lender costs may be higher. Compare the total cost and consider how each option may affect future lending decisions.
It can be possible, but options are more limited and costs higher. Lenders look closely at your recent trading, bank statements and any existing HMRC arrears. Businesses with steady turnover and a clear repayment plan have the best chance. Explaining past credit problems upfront helps a lender assess your application fairly.
Yes, VAT-registered sole traders and partnerships can use VAT loans as well as limited companies. Lenders look at the VAT return, recent bank statements, accounts or tax returns and personal credit history. Finance of £25,000 or less to a sole trader or a partnership of two or three partners can be regulated consumer credit, which affects which lenders can offer it. Sole traders facing a Self Assessment bill rather than VAT can look at income tax loans.
Some lenders will consider it, but overdue VAT and existing HMRC arrears or payment plans are treated cautiously, because they can signal a deeper cash flow problem. Lenders want to see that you can repay the loan and still meet the next VAT bill. Contact HMRC as soon as you know you cannot pay, because penalties and interest build over time. Our comparison of Time to Pay vs a tax loan sets out the options.
Lenders usually fund some or all of a single VAT bill, with the amount based on your VAT return or HMRC statement, turnover and affordability. Business borrowing through our panel typically ranges from £10,000 to around £1 million for tax bills, with larger amounts up to £10 million through secured, property or asset-based finance. The key test is whether you can repay over the term and still meet the next quarter's bill, so a lender may offer less than the full amount. Our VAT calculator helps you work out VAT on sales and purchases.
A professional partnership that funds its VAT and HMRC liabilities deliberately, so its working capital stays in the practice.
An established access equipment business needed VAT support at some points and working capital at others. We arranged both.
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Calculations are intended as a guide only, you may be offered different terms
What our clients say
“I contacted them to apply for a VAT funding loan. Simon responded within half an hour of my request and was able to confirm funding within a 24 hour period. It was the first time I have had to apply for funding owing to a short-term cash flow problem, and he made the journey so easy. Kind and highly efficient: I would highly recommend them for a fast, professional service.”
“Simon was fast, kept us updated at all stages and was a real pleasure to work with on our asset finance. I highly recommend this company: excellent service all round.”
“Spoke with Simon, who managed to get me the loan I needed promptly. The whole process was very smooth and was completed within a few days.”
“Getting a business loan can feel like a bit of a minefield, but everything was broken down for me in great detail. Will use again in the future!”
“Simon was a pleasure to deal with and helped us find a business loan that matched our growth goals and future expansion plans.”
“I couldn’t source funding for my business, but the team got in touch within an hour and had it sorted within 24 hours. Fantastic service, and I would definitely use them again.”
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