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
What you need to know.
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.
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 transactionAbout VAT loans
Specialist knowledge. Better outcomes.
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.
If the VAT you need to fund was charged on a commercial property you are buying, rather than owed to HMRC, see property VAT bridging loans, which are repaid from the VAT refund.
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 is short-term business finance that pays your VAT bill to HMRC on time, which you then repay in monthly instalments, usually over a few months. Smart Funding Solutions, a whole-of-market commercial finance broker, searches lenders that specialise in VAT funding and helps you pick a term that clears the loan before your next VAT quarter falls due.
The British Business Bank's guide, VAT loans: what they are and how to get one, describes repayment terms of three to twelve months. The lender sets its own criteria, rate and term for each case.
Act before the deadline: contact HMRC about a payment plan, or arrange VAT funding so the bill is paid on time and spread over the following months. Smart Funding Solutions, a whole-of-market commercial finance broker, can show which lenders on its panel fund VAT bills, so you can compare a loan with HMRC instalments before penalties start. Ignoring the bill makes every option more expensive.
Penalties for VAT periods from 1 January 2023 start once a payment is more than 15 days late, with late payment interest from day one: see GOV.UK: late payment penalties for VAT. If the deadline is close, an emergency business loan may also help. Instant Quotes shows which lenders on our panel may fund your VAT bill, with no credit search.
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.
Every case moves at the lender's pace: decisions can come within a few working days once a lender has everything it needs, so the earlier you start, the more lenders stay open to you.
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.
Every lender sets its own rules. On the VAT products on our panel, the main conditions are:
at least 12 months on most VAT products, rising to 2 or 3 years with some lenders.
most VAT lenders want fair credit or better, and several refuse any adverse credit. One lender on our panel will look at existing HMRC arrears.
some products are for professional firms only, and one needs a limited company with turnover from £250,000 a year.
many ask for a director's personal guarantee, and some need the directors to own their homes.
repayments must fit alongside wages, suppliers and the next VAT bill, judged from your bank statements.
Not sure where you stand? Get instant VAT funding quotes to see which lenders match your answers.
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.
For most VAT-registered businesses, the VAT return and the payment are both due one calendar month and 7 days after the end of the VAT period, according to GOV.UK: submit your VAT return. The deadline applies even if it falls on a weekend or bank holiday, so the money has to reach HMRC by then.
| VAT quarter ends | Return and payment due | Start a VAT loan application by |
|---|---|---|
| 31 March, 30 June, 30 September, 31 December | 7 May, 7 August, 7 November, 7 February | Around the 7th of the month after the quarter ends |
| 30 April, 31 July, 31 October, 31 January | 7 June, 7 September, 7 December, 7 March | Around the 7th of the month after the quarter ends |
| 31 May, 31 August, 30 November, 28 or 29 February | 7 July, 7 October, 7 January, 7 April | Around the 7th of the month after the quarter ends |
The last column is a planning guide, not a lender rule: it leaves about four weeks before the deadline for the lender's checks, signing and payment. If you file early, you can apply early.
Late payment interest is charged at the Bank of England base rate plus 4%. Sources: GOV.UK: late payment penalties for VAT and GOV.UK: late payment interest on VAT (rules for VAT periods starting on or after 1 January 2023).
A business owes £30,000 for its March quarter, due 7 May, and wants to spread it over three months. The figures below are an illustration we have worked out, not a quote. The rate you are offered depends on the lender and your circumstances.
| Option | Cost of spreading £30,000 over 3 months | Monthly payment |
|---|---|---|
| Loan at an illustrative 20% a year | About £1,006 in interest | About £10,335 |
| Flat charge of 3.15% over 3 months | £945 | £10,315 |
| Paying HMRC 31 days late instead | £1,800 in penalties (3% at day 15 plus 3% at day 30), plus late payment interest and a daily second penalty | Not applicable |
The 3.15% flat charge is the lowest flat rate on a VAT product on our panel (October 2026), for businesses that meet that lender's criteria. Any arrangement fee is added on top. Run your own figures through the business loan calculator and compare the total repayable, not just the monthly payment.
These lenders on our panel offer VAT loans or VAT funding. Several only lend to professional firms such as solicitors, accountants and medical practices; others lend to most trading businesses. Read the lender reviews for more detail, or compare the wider HMRC loans options.
| Lender and product | Amount | Term | Indicative price | Main conditions |
|---|---|---|---|---|
| Premium Credit VAT Funding | £10k to £1m | 3 months | 3.15% flat over 3 months | 12 months trading; personal guarantee: usually asked for over £150k, case by case; no adverse credit |
| Playter Professions VAT Loan | £25k to £2m | 6 to 12 months | 8.9% to 9.5% a year | 12 months trading; professional firms only; personal guarantee; no adverse credit. £200 document fee, charged on drawdown |
| Braemar Finance Professions VAT Loan | £25k to £500k | 3 months | 15% a year | 12 months trading; professional firms only; personal guarantee; no adverse credit |
| Playter VAT Funding | £30k to £500k | 3 to 12 months | 1.33% to 2.25% a month plus an arrangement fee of 1% to 10% | 12 months trading; turnover from £250k a year; limited companies; no personal guarantee on the rate card |
| Admiral Finance Professions VAT Loan | £10k to £100k | 3 to 11 months | 17% to 19% a year | 2 years trading; professional firms only; homeowner directors; personal guarantee |
| White Oak Loans Oak VAT Loan | £25k to £250k | 1 to 12 months | 18% to 23% a year | 3 years trading; profitable; personal guarantee; no adverse credit; will look at HMRC arrears |
| County Finance Group Practice VAT Loan | £10k to £150k | 3 months | 22% a year | 12 months trading; professional firms only; no personal guarantee on the rate card; no adverse credit |
| Admiral Finance Commercial VAT Loan | £10k to £100k | 3 to 11 months | 23.5% to 27.5% a year | 2 years trading; homeowner directors; personal guarantee |
| Revolve VAT Funding | £25k to £100k | 1 to 3 months | 3% a month | 12 months trading; homeowner directors; personal guarantee. Needs a personal guarantee and an equitable charge on your home, usually with home equity of twice the facility. Homeowners only |
| Metro Bank Asset Finance Professions VAT Loan | £150k to £1m | 1 to 12 months | Rate on application | 3 years trading; professional firms only; profitable; personal guarantee: not always needed with a strong credit score; no adverse credit |
| Siemens Financial Services Professions VAT Funding | £25k to £100k | 3 to 4 months | Rate on application | 3 years trading; professional firms only; personal guarantee |
| Excel-A-Rate Business Services Short-Term VAT Loan | £10k to £15k | 1 to 6 months | Rate on application (weekly payments, £420 document fee) | 12 months trading; personal guarantee |
Indicative ranges from lenders on our panel, checked October 2026; your rate depends on your circumstances. Figures come from the rate cards these lenders give us as a broker, with amounts shown within the £10,000 to £20 million range we arrange. Lenders set their own criteria and pricing, approval is always the lender's decision, and this is not a quote.
| Option | How it works | Watch for |
|---|---|---|
| VAT loan | A lender pays the bill; you repay over a few months | Interest and fees; usually a personal guarantee |
| HMRC payment plan (Time to Pay) | HMRC agrees monthly instalments on an overdue bill | HMRC decides; interest still runs |
| Revolving credit | Draw for each bill, repay and draw again | Fees on the limit; needs steady trading |
| Invoice finance | Releases cash tied up in unpaid invoices | Only for business-to-business sales |
GOV.UK says HMRC checks whether a payment plan is affordable, and that companies must reduce the debt as much as possible first: see GOV.UK: if you cannot pay your tax bill on time. Our guide to Time to Pay versus a tax loan sets out the trade-offs, and corporation tax loans and income tax loans cover the other HMRC bills.
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 £20 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.
VAT finance, also called VAT funding or a VAT loan, is short-term borrowing used to pay a VAT bill to HMRC on time. The lender pays the bill or funds you to pay it, and you repay over a few months, ideally before your next VAT quarter is due.
For most businesses, the VAT return and payment are due one calendar month and 7 days after the end of the VAT period, so a quarter ending 31 March is due by 7 May. Check your own dates in your HMRC online account and on GOV.UK.
Decisions can come within a few working days once a lender has your VAT return, bank statements and accounts, and funds can follow shortly after signing. Timescales depend on the lender and your case, so start well before the deadline rather than in the final week.
A lender pays your VAT bill to HMRC, or funds you to pay it, and you repay in monthly instalments, usually over a few months so the loan is cleared before the next quarter. Smart Funding Solutions, a commercial finance broker, searches lenders that specialise in VAT funding. You will usually need your VAT return, bank statements and accounts.
Contact HMRC before the deadline to ask about a payment plan, or arrange a VAT loan so HMRC is paid on time and you repay the lender over a few months. Compare the cost of each, because HMRC charges interest and penalties on late VAT. Smart Funding Solutions, a commercial finance broker, can show which lenders fund VAT bills. If the business is in serious difficulty, Business Debtline gives free advice.
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.
Independent write-ups of lenders on our panel that offer this type of finance. Smart Funding Solutions is a broker and is not part of any lender listed. See all lender reviews.
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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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