VAT Loans

What are VAT Loans?

If you’re a UK business owner, you’ll be familiar with the challenge of managing your VAT payments. These payments are due quarterly and can put a strain on your cash flow, particularly if you’re a smaller business. One option available to businesses to help ease this burden is a 3-month VAT loan. We’ll explore the key features of a 3-month VAT loan and how it can benefit your business.

Short-term finance: A 3-month VAT loan is a type of short-term finance that allows businesses to borrow money to cover their VAT payments for three months. This means that the loan is repaid over the same period as the VAT payment cycle, making it easier for businesses to manage their cash flow.

Flexible loan amounts: VAT loans are typically available for amounts up to the value of your VAT payment. This means that you can borrow the exact amount you need to cover your VAT payment, rather than having to borrow more than you need.

Quick and easy application process: The application process for a VAT loan is usually quick and straightforward, with many lenders offering an online application process. This means that you can apply for a VAT loan and receive a decision quickly, allowing you to access the funds you need to cover your VAT payment.

Fixed interest rates: VAT loans typically have fixed interest rates, which means that the interest rate you pay is fixed for the duration of the loan. This can make it easier to budget and plan for your repayments, as you know exactly how much you’ll be paying each month.

No early repayment penalties: Many VAT loans allow you to repay the loan early without incurring any penalties. This means that if you’re able to pay back the loan sooner than the agreed term, you can do so without any additional costs.

Avoid penalties for late payment: By taking out a VAT loan, you can ensure that you have the funds to make your VAT payment on time, avoiding any penalties for late payment from HM Revenue & Customs (HMRC).

In conclusion, a 3-month VAT loan can be a flexible and cost-effective way for UK businesses to manage their cash flow and avoid penalties for late payment. With a quick and easy application process, fixed interest rates, and the ability to repay the loan early without incurring penalties, a VAT loan can help businesses to budget and plan for their VAT payments with confidence

Benefits of VAT Loans

VAT Loans offers many benefits to UK businesses, including:

Cashflow Benefits

Without sufficient cash reserves, every business will eventually fail. VAT Loans provide an extra stream of funding that can be used in addition to bank overdraft or invoice finance facilities, without impacting on these existing facilities. This added stream can even out cashflow peaks and troughs. Not only that but the extra working capital available can be used to reduce costs elsewhere, and is available for other business growth or investment needs.

Cost Saving Benefits

Some businesses have found themselves in the painful position of incurring VAT late payment penalties (surcharges) from HMRC even when filing their payments a day or so late. Repeated late payments see an escalating penalty being applied and it can reach as high as 15% added to the VAT liability. When a business is in this position it can be very hard to break the cycle. By ensuring VAT is paid on time, every time, businesses already subject to surcharge can see an immediate reduction in costs, and other businesses can rest assured that they won’t find themselves running the risk of being in this position.

HMRC Relationship Benefits

Having a great relationship with HMRC is very helpful if and when VAT loan and other tax inspections are undertaken. By ensuring that VAT loan is paid on time HMRC can build a picture of a properly managed and well run company that settles its affairs in a timely manner.

Peace of Mind Benefits

With so many things pulling at the focus of a business owner there is alot to be said for having order and structure in place in as many business areas as possible. By ensuring that a VAT loan facility is always in place a business owner has one less thing to worry about and can be confident that their VAT will be paid on time, costs are more evenly spread and cashflow is being maximised.

Security Benefits

Most forms of lending require some form of security offered by the borrower to the lender. Overdrafts, for example, will typically require the business to offer a debenture over all business assets to their bank. Sometimes this can extend to charges over directors’ homes. Security in VAT Loans, on the other hand, is often offered entirely unsecured and where security is required it is only in the form of an unsupported directors personal guarantee, meaning no charges against any property are sought or requested. Most business owners, confident in their business trading for the next year, have no concern about offering guarantees in these short term circumstances.

Get a VAT Loan Quote Today

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Interest Rates

Quick & Easy Application Process

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From Inquiry to Payout in Under a Week

Fee Free Brokerage Service

Access the Very Best Interest Rates

Quick & Easy Application Process

Dedicated Account Manager Supports You

From Inquiry to Payout in Under a Week

Fee Free Brokerage Service

How VAT Loan Works

We make your VAT loan journey as simple as possible.

As your trusted business finance partner, we work closely with you every step of the way to ensure a seamless process:

Consultation and Options

From your first call, email or completed webform we will act as your trusted partner, understanding your objectives and putting together options for you to consider.

Information Gathering

We may need to ask you some general business questions and ask for some financial information from you in order to carefully prepare your personalised quotation from our funding panel.

Funding Application

Once you have reviewed your no obligation quotations and are happy to proceed we will prepare your application and liaise with the lenders to secure the funding you need.

Agreement Finalization

Unlike some brokerages, we do not charge you any payments or fees for our brokerage service, so your engagement with us is entirely cost, risk and obligation free.

Deal Activation

From here we ensure everything is finally packaged and presented to the finance company who will activate your agreement and pay HMRC directly, or, subject to approval, to you, allowing you to enjoy the peace of mind that you wont incur any late payment surcharges and have the added benefit of the additional working capital.

Types of VAT Loan

Discover the two main options for VAT loans tailored for businesses in the UK, offering flexible financing solutions to manage VAT obligations effectively and optimize cash flow.

Full VAT Loan

A three month VAT loan is sought to cover the exact, to the penny, VAT liability of a business.

A copy of the completed VAT return is provided to the funder and once agreed the finance documents are prepared for the precise amount.

Funds can be paid to HMRC directly, or to the business, for onward payment to HMRC, subject to lender approval.

Or the business can pay HMRC directly in full in the first instance and then have the VAT payment refinanced a day or so later, subject to proof of payment from the business to HMRC being received by the funder.

The business then repays the loan plus interest in three monthly installments to fit in with the business’ budgeting needs.

Partial VAT Loan

Sometimes businesses may only want to fund a part of their VAT liability and don’t require funding for the full amount – the partial VAT Loan is perfect for this situation.

The underwriting process is exactly the same as for the full VAT Loan however a specific amount is requested, rather than the full VAT liability.

As only some of the VAT will be funded by the finance company, the business customer must ensure that the balance is paid to HMRC by the deadline to avoid incurring any surcharges.

This option still provides the bulk of cashflow benefit to the business customer and ensures no surcharges are incurred, whilst reducing the overall interest cost.

How VAT Loan Works

We make your VAT loan journey as simple as possible.

As your trusted business finance partner, we work closely with you every step of the way to ensure a seamless process:

Consultation and Options

From your first call, email or completed webform we will act as your trusted partner, understanding your objectives and putting together options for you to consider.

Information Gathering

We may need to ask you some general business questions and ask for some financial information from you in order to carefully prepare your personalised quotation from our funding panel.

Funding Application

Once you have reviewed your no obligation quotations and are happy to proceed we will prepare your application and liaise with the lenders to secure the funding you need.

Agreement Finalization

Unlike some brokerages, we do not charge you any payments or fees for our brokerage service, so your engagement with us is entirely cost, risk and obligation free.

Deal Activation

Why choose MacManus Finance for VAT Loans?

MacManus Asset Finance are the Business Moneyfacts Asset Finance Broker of the Year 2024 – awarded as a result of our incredible levels of delivering for our clients. We are a firm directly authorised and regulated by the Financial Conduct Authority and are a full member of the National Association of Commercial Finance Brokers having achieved the enhanced “NACFB Assured” status, we uphold the highest standards of integrity and regulatory compliance.

Led by a team with over 25 years of business finance experience and a track record of supporting hundreds of UK businesses, our credibility speaks for itself. Our extensive network of business finance providers, offering competitive rates and flexible terms, delivers tailored financial solutions that meet the diverse needs of businesses.

At MacManus Asset Finance, we ensure a personalized service and foster long-term partnerships with each of our clients.

Frequently Asked Questions

What finance periods are available?

VAT Loans are available for 3 months to fit in with the quarterly VAT cycle. This allows a business to take advantage of repeating the exercise each quarter if required. Some clients use the facility once or twice each year, dipping in and out as needed.

What rates of finance can you offer?

We will always deliver the best rate of finance possible based on your specific circumstances.

Our extensive funding panel means we can help businesses in every situation, as such every client will receive bespoke pricing based on their credit worthiness, market conditions and industry appetite that varies from time to time.

Our rates, for the best clients, are market leading and you should have no hesitation in contacting us if price is your motivator.

How long will it take to arrange the finance?

We are super quick. We will provide you with indicative terms within 5 minutes of a conversation.

When you ask us to proceed to application, we will request some financial and business information from you to support the application.

Once received your application will be sent to the finance providers within 60 minutes.

Funders have varying service times from 1 hour to 5 days, but most are around 3 days for a decision.

Once agreed we let you know and can ensure we pay HMRC in good time.

I may need a VAT loan every quarter. Can you assist with this?

Absolutely!

Most of our clients use the facility every quarter and it becomes an additional cashflow tool that they can rely on.

We maintain close contact with you and will reach out to you around 3 weeks before your VAT bill is due to ask if you are likely to need the facility again. We’ll handle everything for you from there.

Provided a good payment history is maintained it is usually straight forward to get the new facility agreed.

Which finance companies do you work with?

We have active lines with dozens of providers, including most high street bank and most of the major asset finance providers, business loan providers and invoice finance firms plus a number of niche players.

How much do I have to pay to deal with you?

For VAT loans we do not charge our clients any fees at all. We are paid commission by the finance providers for successfully placing business with them, and we only get paid if we deliver a finance solution that you are happy with.

As a result we ask all clients to engage with us on the basis of good faith, in that, if we are asked to secure funding and do indeed deliver what we promised, that our clients complete the transaction with us.

How much can you fund?

Our minimum VAT loan amount is £10,000 however we have no maximum limit.

Each application is considered on its own merits.

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Business Moneyfacts Asset Finance
Broker of the Year 2024