Nigel Smith

Nigel Smith

Why a VAT Loan Facility Might Become Necessary

BloomSmith specialise in VAT bridging loans, and have experience in dealing with clients from a wide range of backgrounds.

In most cases, our clients have come to us having decided that they require the additional help of a VAT loan facility. In a bid to make the phrase itself more digestible, and to add some much-needed context, we have listed below some of the scenarios in which this type of financial assistance might become necessary.

You have forgotten about VAT

One of the most common reasons people require the assistance of a VAT loan is simply that they had not realised they’d need to pay VAT. Often overlooked on commercial properties, VAT represents a large portion of the overall payment. With commercial property payments often reaching seven figures, 20% of that total amount is not easy to come by without significant notice. Often, therefore, a VAT loan facility or bridging loan represents the difference between being able and unable to complete the purchase successfully.

You are concerned about cash flow

With around 40% of the total property worth often required by mortgage banks, and then an additional 20% of VAT payable on completion, the total amount of money required to complete the purchase of a commercial property is extremely large.

Although VAT is often recoverable from HMRC, this process can take up to three or four months, causing serious damage to a business’ cash flow. In a bid to ease the financial strain of an already difficult time, many turn to VAT loan facilities.

You need help funding your dream commercial property purchase

We would always advise that anyone of the above mindset proceed with caution; VAT loans should never be used to buy a property you cannot afford. If, however, you are confident in your ability to monitor cash flow in the six months following your purchase, VAT bridging loans can actually open up the possibility of a more expensive commercial property.

Again, we should stress the importance of not viewing our loans as a means to buying an unrealistic property. Many people do find, though, that they are only a small percentage short of their dream premises. In that situation, we would advise that you speak to one of our advisers about the your individual situation. From there, we can work together to decide whether or not our VAT loan facility would be right for you.

Contact BloomSmith

If you have any remaining questions about whether you might benefit from a VAT loan facility, please get in touch with BloomSmith. You can reach us by emailing, or by calling 020 3488 3411.

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