VAT Loans

All UK businesses with a turnover over £85,000 must register for VAT and make quarterly payments to the HMRC. It’s a good idea to keep track of when these payments are expected so you can plan ahead. VAT payments must be paid on time, and failure to do so could result in fines or other financial penalties. 

As any small business owner knows, unexpected costs happen. However, it can become a real headache when these cashflow issues happen at the same time as a VAT payment is expected. That’s where VAT loans can help.

A VAT loan can help you meet your financial obligations without putting a strain on your business.

A VAT loan is a financial product taken out to cover the cost of your quarterly VAT payment. It’s a way to spread the cost of these, often significant, payments when you haven’t put money aside or cash flow isn’t as healthy as you’d like.

However, getting a VAT loan with traditional loan providers usually means admin fees, lengthy approval processes and inconvenient repayment schedules. 

At 365 Finance, we think getting loans should make your life easier, not harder, which is why we offer revenue-based financing. It means taking a small percentage of every card transaction you take – when your customers pay you, you pay your loan.

It’s simple, stress-free and designed specifically for business owners like you.

With typical loan providers, you have to jump through numerous eligibility hoops, but we keep it simple here.

If you own a business in the UK that’s been trading for a minimum of 6 months and your monthly credit and debit card sales exceed £10,000, you’re eligible for a loan with us.

To find out more about how much you can apply for and your potential repayment schedule, try our online tool.

Thinking about applying for a VAT loan? It’s important to have a good idea of the product before deciding if it works for your business.

Here’s what you need to know…

Advantages Of VAT Loans

• Improved cash flow

By paying HMRC directly through your VAT loan provider, you can free up cash flow that can be better spent on essential business operations that help you to move in the right direction.

• Avoid penalties

Late VAT payments result in hefty fines and penalties, which can add even more financial stress to your shoulders. Using a loan helps you avoid any of these additional expenses.

• Pay back in instalments

You can split payments into instalments rather than the lump sum you would have paid to HMRC directly. Or, if you choose revenue-based financing, you can pay back incrementally with a percentage of your card payments.

Disadvantages Of VAT Loans

• Repayment is shorter

VAT loans are short-term, so you don’t have as much time to repay. You must plan your cash flow accordingly to avoid late payment penalties (unless you choose revenue-based financing).

• Higher interest rates

Short-term loans from traditional lenders are often much more expensive due to their higher interest rates, which could lead you to spending more in the long run.

• Involves taking on further debt

Taking out a VAT loan means increasing your business’s debt. It’s essential to plan how you can pay this off in the future before taking on the debt.

If you’re up at night worrying about how you’re going to pay your next VAT bill, a VAT loan may be the right option for your business. Here are some of the reasons why a VAT loan could work for you:

• You haven’t put aside money to cover the expense of your VAT payment
• You operate a seasonal business, and cash flow isn’t as healthy as it usually is, so you don’t have the money to cover your VAT bill
• You want to pay HMRC directly and direct cash flow towards other essential business needs
• You need short-term cash, but feel confident that you will be able to pay off the loan in the near future

Any of the above sound like you? Talk to one of our financing experts to find out how revenue-based finance can help you with your next VAT bill.