Introduction
Sometimes, businesses can be taken by surprise when it comes to the various taxes throughout the financial year, especially when it comes to VAT.
Did you know that some finance providers can offer your company a short-term unsecured loan to cover these costs?
In this guide, you’ll find out everything you need to know about VAT business loans, including what they are and the benefits available.
Let’s go!
What’s in this guide?
Top 10 loan providers
1. Boost Capital
Type: Alternative Finance Provider
Loan amount: £3,000 – £500,000
Typical APR: 1.5% – 2.5% monthly APR
Loan term: 4 to 18 months
Boost Capital is a highly recommended alternative finance provider in the UK, with many customers giving this lender five stars on trusted websites such as Trustpilot.
They offer fast funding, with minimal paperwork, approval in 24 hours and access to your funds in around two days.
Representative: Borrow £10,000 for 12 months at 47.9% representative APR. Interest rate of 36.74% p.a. (fixed). Total amount payable is £12,100.
Company rating on Trustpilot: 5 / 5
2. Capify
Type: Alternative Finance Provider
Loan amount: £3,500 – £500,000
Typical APR: 67.89% APR
Loan term: 6 to 10 months
Capify is another highly rated lender, who has been around since 2008 and they have helped thousands of business owners to grow and sustain their business.
Focused on small to medium enterprises, they aim to give you a decision within 60 seconds and solutions tailored to your business.
Representative: Borrow £24,000 for 12 months at 67.89% representative APR. Total amount payable is £29,472.
Company rating on Trustpilot: 5 / 5
3. Funding Circle
Type: Peer-to-Peer Lender
Loan amount: £5,000 – £500,000
Typical APR: Rates start from 4.5% per year AER
Loan term: 6 months to 5 years
Funding Circle is one of the peer-to-peer lenders that have been sprouting up around the UK in the last few years.
With a peer-to-peer platform, the lenders are regular citizens that want to help their savings grow by investing in UK businesses.
For businesses, this means low AER and only a couple of extra fees.
Representative: Borrow £20,000 for 12 months with fixed monthly payments of £1,752 a month, with a completion fee of 2.5% and interest of around £526. Total amount payable is £21,026.
Company rating on Trustpilot: 5 / 5
4. Shawbrook Bank
Type: Bank
Loan amount: £250,000 to £25 million
Typical APR: 0% to 19.9% APR
Loan term: Bespoke repayments
Shawbrook Bank offers their business customers a range of services tailored to their companies, like asset finance, working capital solutions, the point of sale finance and structured finance, as well as commercial mortgages too.
This means that for startup businesses you could finance for the road ahead with equipment and salaries, or even established companies can benefit from more substantial amounts to help you fund expansions.
Company rating on Trustpilot: 5 / 5
5. Government Startup Loan
Type: Government Loan
Loan amount: £500 – £25,000
Interest: Fixed 6% interest p.a.
Loan term: 1 year to 5 years
Government loans are business loans that are funded by government-backed organisations, who usually offer either regional or national business loans depending on their location.
With this loan, in particular, it is aimed at startups less than 24 months old who could benefit from not only finance but mentoring, to help your business grow and thrive.
Representative: Borrow £20,000 for 12 months with fixed monthly payments of £1,721.33 a month, with interest of around £655.94. Total amount payable is £20,655.94.
Company rating on Trustpilot: 5 / 5
6. Spotcap
Type: Alternative Finance Provider
Loan amount: Up to £250,000
Interest: 22.80%, which includes both interest and fee.
Loan term: 1 month to 24 months
Spotcap is a highly regarded alternative finance provider, who since their launch in 2014, has raised £90 million globally, 500 active partners and over 1000 customers.
Although they are a relatively young provider, they have already become a fast favourite according to their five star Trustpilot rating.
Representative: If you borrow £100,000 over 12 months at a representative rate of 24.2% APR, with an interest rate of 1.40% fixed, you will pay 12 monthly instalments of £9,111 which would mean a total repayment of £109,332.
Company rating on Trustpilot: 5 / 5
7. iwoca
Type: Alternative Finance Provider
Loan amount: £1,000 – £150,000
APR: 49% representative APR
Loan term: 0 to 6 months
iwoca prides itself on providing their customers with fair decisions, lightning-fast applications, outstanding flexibility and service.
Thousands of companies have borrowed £500 million, and they could be an excellent fit for many different businesses regardless of size.
Representative: Borrow £10,000 for 12 months at 49% representative APR. Interest rate of 40% p.a. (fixed). Total amount repayable is £12,165. Actual rate may vary based on circumstances.
Company rating on Trustpilot: 5 / 5
8. Ezbob
Type: A lending platform for banks and financial institutions
Loan amount: £1,000 – £120,000
APR: 38.9% APR
Loan term: 1 to 12 months
Ezbob is bringing a change to the way that banks and other financial institutions lend to consumers and small to medium enterprises.
They act as a middleman between banks and customers, so they can offer the excellent rates that you’d typically find when looking to borrow from a bank, but their exceptional customer service.
Representative: Borrowing £50,000 over 12 months would mean you would be repaying £58,873. These payments would be £4,166 a month plus interest on your remaining balance.
Company rating on Trustpilot: 5 / 5
9. Fleximize
Type: Alternative Finance Provider
Loan amount: £5,000 to £500,000
APR: 46.8% APR
Loan term: 1 – 48 Months
Fleximize was named best business loans provided by the British Bank Awards in 2018.
They claim to allow your business to grow at the pace it needs to, by offering relatively long borrowing terms of up to four years, and up to half a million pounds.
This could be a perfect fit for companies looking to purchase their property or vehicles.
Representative: If you borrow £12,500 over 15 months at 46.8% APR and an annual interest rate of 39.0% (fixed), you will pay monthly instalments of £1,066.11. The total charge for credit will be £3,491.65; the total amount will equal £15,991.65.
Company rating on Trustpilot: 5 / 5
10. Danske Bank
Type: A lending platform for banks and financial institutions
Loan amount: No minimum or maximum
APR: Interest is calculated daily and applied monthly.
Loan term: 12 months
Danske Bank, as the name suggests, is a subsidiary of Danske Bank Group which originates from Denmark.
They can offer their customers a bridging loan, which doesn’t have a minimum or maximum amount and can be used for things such as constructing premises, renovations or letting you close a deal without having to wait for another transaction.
Repayment is usually made in a lump sum at the end of your term.
Company rating on Trustpilot: 4 / 5
This list of the top ten business loan providers mainly takes into consideration the companies customer reputation, how much your business can borrow and the interest your lender will charge you.
FAQs
What are business loans?
In short, it’s when you ask a lender like a bank to loan you some money so you can pay for things like more employees – in return, you will pay back this money often over a set period.
You might also have to pay a certain amount of interest.
Interest is when you have to pay back a little extra, as a sort of payment for borrowing that amount of money.
Often, a business loan can come from many different places, so as a business owner you should always try and consider as many possible solutions as possible to find the best deal.
What is a VAT business loan?
These types of loans are often specifically for funding tax costs, such as your corporation and VAT taxes.
This helps you to avoid any problems concerning your cash flow, which can sometimes cripple businesses when it comes to VAT bills which are sometimes annual, twice yearly or quarterly.
Some companies offer longer-term loans for corporation tax which can be up to 60 months in length.
VAT business loans are usually ‘unsecured’, so take a look below to find out more about unsecured loans.
Where can I get a VAT business loan?
Typically, you will find a VAT business loan from alternative finance providers rather than from banks, who usually only offer unsecured loans.
The main difference is that some alternative finance providers will pay this VAT business loan directly to HMRC, whereas an unsecured loan means you’ll have to make that next step yourself.
Merchant Money, for example, understands that VAT typically needs to be paid within three months, which is why they offer both secured and unsecured loans for periods as low as one month to 6 months in length.
This can quickly pay off your loan debt, so there’s one less thing to be concerned with.
What are the benefits of a VAT business loan?
- Funds could be in your account in under 24 hours
- Pay the loan back after you reclaim the VAT
- While if you need a short-term loan, it could be for a month
- There could be no early repayment fees
- Keep your cash flow consistent
- Funds can be paid directly to HMRC
- You can pay back with easy monthly repayments
Can I get a loan with bad credit?
Yes, you can! But your choices will be more limited.
The best thing to do before you get a loan is to try and build up your score, but a loan can also help you do this, as it’s proving that you can borrow money and pay it back.
Peer-to-peer lenders like FundingTree or Funding Circle allow ‘investors’ to invest in your business, with a credit agreement in place that will help you to repair your credit score.
But, these interest rates will likely be very high due to the fees and costs involved.
Another option is revenue advance facilities, which are repaid from a percentage of your future revenues.
This means that it’s almost impossible to default on payments, which is why it is available to businesses with a low credit score.
Typically, you’ll be able to borrow one or two times your monthly sales figures.
Do I need to put up collateral?
No, with unsecured loans you don’t have to put anything up for collateral, like your home or car.
Are unsecured business loans right for me?
This will depend entirely on your personal and business circumstances.
If your business requires a more substantial sum of money, it might be better to try and view the different secured loans on offer.
In the circumstance that you have bad credit, an unsecured business loan could help you build your score.
Top tips
- Always be truthful with your lender
- Compare all of your options
- Make sure that you understand the terms and conditions
- Get advice at the right time
- Make full use of your assets if it makes sense for your business
Loan provider comparison
| Company | Trustpilot Score | Loan Amount | Loan Term | Typical APR |
| Boost Capital | ★★★★★ | £3,000 – £500,000 | 4 to 18 months | 1.5% – 2.5% |
| Funding Circle | ★★★★★ | £5,000 – £500,000 | Six months to 5 years | 4.50% |
| Capify | ★★★★★ | £3,500 – £500,000 | 6 to 10 months | 67.89% |
| Shawbrook Bank | ★★★★★ | £250,000 to £25 million | Bespoke | 0% to 19.9% |
Conclusion
Are you looking for a VAT business loan?
Take a look at the ExpertSure guides to find out more about your finances, or fill out the form at the top of the page to look at your loan options.
