As you would expect, a VAT loan is a business loan which is used to pay your quarterly VAT bill. But, how does it work in practice?

When a business is registered with HMRC for VAT they know that they will have to charge VAT to their customers.  This then needs to be paid to HMRC when they file their VAT return every quarter.  This can cause headaches for smaller business owners who may be struggling with cash flow and have limited cash in the bank.  Whilst a separate bank account can, and should, be set up to put the charged VAT into, the funds saved may be needed to pay other running costs of the business.  If there are insufficient funds in the bank, a business may consider a loan to spread the cost and keep more money in the bank to use for other running costs.

A VAT loan is a short-term, unsecured business loan which is used specifically to pay the VAT bill due.

Application Process

You provide us with some information about your business, including 6 months bank statements and accounts, how much your VAT bill is and we can submit a VAT loan application.


The Lender assesses your business’s creditworthiness, financial health and ability to repay the loan.

Loan Approval

When the loan is approved, the Lender will pay the amount of VAT due directly to HMRC.


The business will then pay back the loaned amount, plus interest, to the lender in 3 monthly instalments.  This is often more manageable than paying the full amount due to HMRC and is particularly useful for businesses with seasonal or ad-hoc trading.

Interest and Fees

Interest will be charged on VAT loans and will often have additional fees such as processing fees.

To discuss your business’s requirements, book a call with one of our friendly team or fill in our contact form.