VAT lending on the rise

White Oak UK, a leading non-bank lender, has experienced a significant increase in its VAT lending since early 2023, driven by rising business confidence.

This year, the firm reported an 83% year-on-year increase in VAT lending, contributing to a 139% overall rise since 2021. This growth indicates that the UK’s small business economy is recovering from the pandemic, despite rising costs and interest rates.

Professional services, support services, and manufacturing industries recorded the highest average VAT bills, following increased business activity. With higher revenues leading to larger VAT bills, spreading these payments helps small businesses manage cash flow more effectively. The average VAT funding package reached £53,000 in the first quarter, a 20% increase from 2020.

One firm benefitting from VAT lending is a legal practice in South West England, specialising in family and employment law. With court costs and fees often delayed until case conclusions, VAT loans therefore help the firm maintain balanced cash flow and working capital. Having partnered with White Oak UK for nearly a decade, the firm relies on VAT loans averaging £75,000 per quarter to manage its operations.

“The nature of our work means we always have multiple cases in progress. Our payments are unpredictable, so we need a reliable, tailored funding source. One size doesn’t fit all, and having a flexible funding solution that meets our specific needs has been crucial to our success,” said the South West firm.

As more businesses turn to alternative funding sources, White Oak UK has established itself as a leader. White Oak UK lent over £167m to SMEs in 2023, with £101m from its own book. Short-term lending accounts for £75m of this total. This provides businesses with rapid funding to maintain growth and manage cash flow.

Moving forward

White Oak UK aims to build on this momentum throughout the year. White Oak UK pledges to lend half a billion to UK small businesses in 2023 to support their growth ambitions.

Andy Davies, Managing Director of Leases and Loans at White Oak UK, stated, “Larger VAT bills reflect stronger business activity. The steady increase we’re seeing shows that SMEs across the country are emerging resiliently from the pandemic and reviving growth plans. We view VAT lending demand as a barometer for overall business performance, and the latest figures renew our optimism.”

“Despite high interest rates and rising costs, more small businesses are turning to alternative lenders to bridge the financing gap. Our VAT lending is known for its quick turnaround, ensuring SMEs receive timely support to succeed and grow.”

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