A VAT bridging loan is a short-term loan used to cover the gap between the purchase of a new commercial property and the collection of VAT on that purchase. The benefit of using a VAT bridging loan is that you can avoid paying interest on the money you borrow from your regular lender.
When purchasing a business property, you must usually pay an additional 20% in VAT. If the property you want to purchase is VAT registered, your invoice will immediately rise by one fifth.
VAT bridging loans allows you to borrow money for a short period of time in order to pay the VAT element that may be due on the purchase of a commercial property. VAT loans are an excellent option for funding this portion of your property purchase while also reducing your income.
Why VAT Bridging Loans are popular?
One of the main reasons why VAT bridging loans are popular is because they can help businesses to cover their costs until they receive their VAT payments. This can be a useful tool for business owners, as it can help them to keep their business running smoothly during times of financial difficulty.
Another reason why these loans are popular is that they can be used to finance a wide range of purchases, such as new equipment or inventory. This can be a useful tool for businesses that need to make a large purchase but do not have the cash on hand to cover the cost.
How does VAT Bridging Finance work?
VAT bridging finance works by providing businesses with a loan that is used to cover the cost of their VAT payments. The loan is typically repaid when the business receives its VAT payment from the government. This type of financing can be a useful tool for businesses that are experiencing cash flow issues, as it can help them to cover their costs until they receive their VAT payments.
Who can apply for VAT Bridging Finance?
VAT bridging finance is available to businesses of all sizes. However, it is important to note that this type of financing is not available to individuals. If you are an individual who is experiencing financial difficulties, you may want to consider other options, such as a personal loan.
How do I apply for VAT Bridging Finance?
If you are interested in applying for VAT bridging finance, contact a member of the team today. There are a number of lenders that offer this type of financing, and you should compare rates and terms before choosing one. You can also apply for this type of financing through an online lending platform.
What are the criteria for a VAT bridging loan?
The criteria for a VAT bridging loan vary depending on the lender. However, most lenders will require that you meet the following requirements:
- You are a business owner who is based in the UK.
- You are experiencing cash flow issues due to the delay of your VAT payments.
- You need access to funds quickly.
- You have a good credit history.
- You have collateral to offer as security for the loan.
How much can I borrow with a VAT Bridging Loan?
The amount that you can borrow with a VAT bridging loan depends on the lender. However, most lenders will allow you to borrow up to 80% of the value of your VAT payments.
What are the repayment terms for a VAT Bridging Loan?
The repayment terms for a VAT bridging loan vary depending on the lender. However, most loans will have to be repaid within 12 months.
What is the interest rate for a VAT Bridging Loan?
The interest rate for a VAT bridging loan varies depending on the lender.
What are the fees for a VAT Bridging Loan?
The fees for a VAT bridging loan vary depending on the lender. However, most lenders will charge a one-time origination fee of 1% to 2% of the loan amount.
Is a VAT Bridging Loan right for my business?
A VAT bridging loan can be a useful tool for businesses that are experiencing cash flow issues. However, it is important to compare rates and terms before choosing a lender. You should also consider other options, such as a business loan, if you are an individual who is experiencing financial difficulties.
How Much Can You Borrow With VAT Bridging Loans
There are a few lenders who provide VAT bridge loans. The majority of lenders calculate the amount you may borrow based on the property’s value.
The amount you can borrow also depends on your creditworthiness, time in business, and the health of your business.
In most situations, firms can reclaim the VAT they have paid on property transactions with HMRC. However, recouping the VAT is a time-consuming and complex procedure that may deplete a company’s resources.
Looking to get started with your VAT Bridging loan? Contact a member of our team today