Myths of VAT loans

A VAT loan can be an essential lifeline for your business in times of restricted cash flow. A flexible solution with bespoke repayment terms, a VAT loan from White Oak UK can ease the pressure and allow you to focus on the important things. However, there are many misconceptions and myths about this type of business finance – we’ve considered some of the most common below.

While V-A-T are just three little letters, they have the power to terrify even the most seasoned of business owners. We get it – just when you think you’ve got your cash flow under control, that hefty VAT bill rolls in, demanding its pound of flesh. That’s where the helpful VAT loan comes in, right?

Well, not everyone thinks so. From whispers of sky-high interest rates to fears of getting tangled in a web of debt, VAT loans have their fair share of myths and misconceptions. In this article, we’re exploring the biggest myths about VAT loans—so you can make informed (and stress-free) decisions for your business.

Myth 1: Businesses who need VAT loans are struggling

Business finance is a tool for growth, not a last resort option. If you find yourself seeking help to cover your VAT bills, you’re not alone. We work with a plethora of clients in all shapes and sizes from a range of industry sectors. The one thing many of them have in common is that they use our VAT loans to take the pressure off and to promote focus on business growth instead.

Myth 2: VAT loans are only for large businesses

Another common misconception is that you have to be a large business to secure VAT finance. While some eligibility criteria do apply, we have several bands of loan terms to suit businesses of all sizes. Our minimum requirements are:

• That you are a limited company
• You’ve been trading for 3 years or longer
• You have an annual turnover of £1,000,000 or more
• You have a proven history of financial reporting and operations

Myth 3: The VAT loan application process is long and complicated

Many loan application processes are mired in lengthy waiting times and endless paperwork. However, lenders are streamlining their procedures to reduce these frustrations and provide a better service for their clients. White Oak UK is no exception – we have a reputation for quick turnaround times (just take a look at our reviews) and our eligibility checker can further assist in the process (and won’t affect your credit score). You can get access to VAT loans and other business finance products in as little as 48 hours.

What will affect my VAT obligations as a business?

There is a lot of confusion around what can affect your VAT liabilities as a business. Here are some quickfire examples below:

• High-Value Purchases: Where businesses buy expensive materials, machinery, or equipment, these will be subject to VAT. If these purchases are large, it will result in a significant VAT liability.
• VAT on Supply of Goods and/or Services: When a business completes a project and invoices the client, VAT is typically charged on the final payment. Larger projects mean larger invoices, which means higher VAT bills. This can be especially high if you are working on high-value construction projects, i.e. a construction firm working on a commercial building project. Where the supply of services is mixed (e.g. building materials and labour) the VAT is charged on both, and the cumulative amount can be substantial.
• Late or incorrect VAT filings: If a business fails to properly file VAT returns, or there are discrepancies in how VAT has been handled on previous transactions, they might receive a demand for back VAT or penalties, which can result in a large bill.
• Irrecoverable VAT on Business Expenses: Where a business cannot recover VAT on certain business expenses (for example, on materials or equipment used in non-taxable activities), this will further add to their overall VAT liability (given there is zero or only partial VAT recovery).
• Exporting goods: You do not charge VAT if goods are exported from:
• Great Britain to a destination outside the UK
• Northern Ireland to a destination outside the UK and EU

Who Can Apply for a VAT Loan?

White Oak UK provides quick, flexible VAT finance for small businesses. You can get approval on amounts between £10,000 and £5 million in as little as 48 hours, with repayment terms tailored to your needs. Allow us to help you stay ahead of your VAT payments so that you can focus on what’s best for your business.

Talk to us about business finance today by:

• Calling 01244 525405, Emailing us at admin@whiteoakuk.com
• Getting support via our instant chat.

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If you are looking to find the right finance for your business, contact us today.

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