VAT lending on the rise

  • White Oak UK’s VAT lending increased by 83% year-on-year as business confidence gradually regains momentum
  • £39m in VAT loans lent to business so far in 2023, with £34m from its own book

White Oak UK, one of the UK’s leading non-bank lenders, has seen a strong uptick in its VAT lending offering since the start of 2023, as business confidence continues to increase.

So far this year, the firm has reported an 83% year-on-year increase in its VAT lending offering – amounting to a 139% rise in VAT lending overall since the start of 2021. This increase shows that the UK’s small business economy is well on the trajectory to post-pandemic recovery despite strong economic headwinds with rising costs and interest rates.

Firms across professional services, support services and manufacturing industries recorded the highest average VAT bill of all sectors, following a rally in business activity. With increased revenue leading to higher VAT bills, spreading the cost of these payments allows small businesses to manage their cash flow more effectively. The average size of VAT funding packages averaged at £53,000  in the first quarter of the year– which marks a 20% increase on the figure for 2020.

One of the firms benefitting from VAT lending is a legal firm based in the South West of England, which specialises in family and employment law. With court costs and fees often left pending until the conclusion of a case, the law firm benefits from VAT loans to maintain a balanced cash flow and working capital. Having worked with White Oak UK for almost a decade to spread the cost of its VAT bills, averaging £75,000 per quarter, this type of funding is essential to help manage their business activities.

“The nature of our work means we always have multiple cases on the go. As our payments come in ebbs and flows, we need a tailored source of funding we can rely on. One size doesn’t fit all and having the security of a flexible funding solution that caters for our specific needs has been integral to the success of our business,” said the South West firm.

While more and more businesses across all sectors are looking to alternative sources of funding, White Oak UK has proven itself a leader in the space, having already lent over £167m to SMEs across the country in 2023 – £101m of which was lent from its own book.  White Oak UK’s short-term lending offering makes up £75 million of this figure, providing businesses with rapid funding solutions to ensure they can maintain growth and manage cashflow.

White Oak UK is dedicated to building on this momentum throughout the year, following its pledge to lend half a billion to UK small businesses in 2023 to help them achieve their growth ambitions.

Andy Davies, Managing Director of Leases and Loans at White Oak UK said: “With larger VAT bills being a natural by-product of stronger business activity, the steady increase we are seeing is a clear sign that SMEs across the country are emerging resiliently from the pandemic and reviving their plans for growth. We often look at the demand for VAT lending as a barometer for overall business performance, and the latest figures show are providing us with renewed optimism.

“While we are still operating in a difficult backdrop with high interest rates and rising costs, more and more small businesses have been turning to alternative lenders to plug the financing gap. Our VAT lending offering is renowned for its quick turnaround time, ensuring SMEs across the country receive the support they need to succeed and grow when it’s needed most.”

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