Home Others What Are VAT Loans And How Do They Benefit You?

What Are VAT Loans And How Do They Benefit You?


Numerous businesses have benefited from business loans. This type of loan gives business owners a capital that they can use for different purposes. Some of the most useful business loans available today are VAT loans.

The finances of a business may be put at risk once unexpected or larger-than-anticipated VAT bills come. The good news is you can now apply for a VAT loan from a variety of lenders, physically or online. VAT loans provide business owners with the needed funds to pay bills in Her Majesty’s Revenue And Customs (HMRC).

Many business owners put off the idea of taking out loans in the payday variety like VAT loans because they’re often associated with unreasonable and substantial interest rates. In truth, however, the benefits of VAT loans outweigh any negative stories about it.

This post is a useful guide to VAT loans and the benefits of getting one for your business. Read on below to learn more.

VAT Bills and VAT Loans: What Are They?

It’s normal for startup business owners to be unfamiliar with the different tax bills that their business needs to pay. Value Added Tax or VAT is a standard tax in the UK that applies to goods and services that a company sells. HMRC requires all businesses to register and supply their VAT return for them to pay or claim their VAT.

The VAT rate can vary depending on what line of business you are in. There are penalties for VAT bills that a company fails to pay on time. The problem is that the amount of the VAT bill comes as a surprise to many business owners, making it difficult for them to meet the payment deadline. Ideally, a business or company should set aside funds for the VAT bill annually, but that doesn’t happen very often. In a situation where financial pressures are piling up, and a business can’t pay its VAT bill, VAT loans come to the rescue.

A VAT loan will help a business pay its VAT bill. Some lenders pay the due to HMRC directly on behalf of the business owner. The repayment terms of VAT loans can be one to three months or longer.

The Benefits Of VAT Loans.

Can VAT loans really help your business? Is getting one a good idea? Discover the answers to your questions below:

  1. Meet Payment Deadlines.

The primary purpose of a VAT loan is to pay a VAT bill on time if the fee comes to your way unexpectedly. If you’re currently in a difficult financial situation and would like to avoid penalties from delayed or late VAT bill payment, VAT loans offer significant help. Think of it as short-term assistance and something that would help your business bridge the gap.

  1. VAT Loans Offer Peace Of Mind.

VAT bills can be a headache, especially if you come across it unprepared. A VAT bill is a lot of money, too, especially if it’s coming from a property that you’re trying to purchase. That said, it can cause a significant strain on your finances. A VAT loan could be the solution that you need, and it can be the difference between having peace of mind while running your day-to-day business and experiencing last-minute panic.

  1. Getting A VAT Loan Is Quick and Easy.

It’s not unusual for business owners to be surprised by a VAT bill. They end up panicking at the idea of not being able to raise the necessary finances within a short period. Luckily, VAT loans are quick to arrange. Depending on the circumstances, lenders can provide the money in less than five days.

  1. The Process Is Streamlined And Straightforward.

While the process of paying off a VAT bill is easy, it becomes complicated when you don’t have the funds for it. This is why lenders aim to make the process of securing a VAT loan as straightforward as possible. Lenders understand the importance of avoiding delays in paying the VAT bill, and they’re not going to make the whole thing more complicated as it should be.

  1. Allows You To Use Your Capital With Other Significant Projects.

You have funds, and you’re planning to use it as capital to take on a new project for your business, but here comes the VAT bill. Will you try to use up your money to pay off the bill or find another solution for it? Most business owners will choose the first option, but that doesn’t have to be that way. Proceed with developing your business using your available funds as capital and let a VAT loan take care of your existing VAT bill.

  1. Use A VAT Loan For A Variety Of Purposes.

You can use the funds from your VAT loan for different purposes. Depending on which situation you are currently in, you can use the money from your VAT loan for the following:

Quarterly VAT Bill – A VAT bill should ideally be a high priority for business owners. However, most business owners are caught off guard when the VAT bill presents itself, with most of them having nothing on their budget to pay off the tax. Quarterly VAT causes problems to businesses if not handled right away, as it will result in penalties. Business owners can opt to get a VAT loan to solve this problem.

VAT When Buying A Property – Are you planning to purchase a property for your business? You also have to pay the VAT since most properties are VAT-registered. The VAT is an amount on top of the original price of the property. So, you’re already paying a high amount to obtain the property, and spending another amount coming from the VAT could be too much for your prepared funds. Securing a VAT loan would be an excellent idea in this challenging situation. Repay the loan once you reclaim the VAT from your purchase.

PAYE – Pay-As-You-Earn is a system of tax collection by HMRC. You have to pay your PAYE dues quickly to avoid penalties. If it’s not possible for you to raise the money, you can always get a VAT loan and have the funds ready in as little as one day.

Corporation Tax – As a startup business owner, one of the ways to reduce the risk of your business failing is ensuring that you pay your corporation tax on time. However, just like any other business tax, you may not have enough money when a corporation tax presents itself. To avoid penalties from adding up and putting your business under significant financial pressure, get a VAT loan and immediately solve the problem. 

Final Thoughts.

VAT loans bring many benefits to the table. It will allow you to move forward with your business without tying up your funds to pay for your VAT bill. However, business owners have to remember that VAT loans only exist to bridge the gap. Paying off the business tax yourself is still the best solution if you can set aside funds for it.