VAT Bridging Loans
When buying commercial property in the UK, VAT often presents an unexpected challenge.
This additional 20% cost can strain cash flow and potentially derail transactions.
VAT bridging loans offer a rapid solution, allowing you to borrow the VAT element and complete your purchases smoothly and efficiently.
Expert finance advice
tailored to you
Quality service
Fast, friendly and professional service.
Lender Choice
Over 250 Banks, Hedge Funds, Family Offices & more.
Experience
Over 15 years of specialist finance broking.
Bespoke Lending
Finance tailored specifically to meet your needs.
Understanding VAT on Commercial Property
VAT applies to most commercial property purchases in the UK, adding 20% to the agreed purchase price.
This tax particularly affects new buildings (less than three years old) and properties where the seller has opted to charge VAT.
For a £500,000 property, the VAT bill reaches £100,000 – a significant sum that can disrupt a buyer’s financial planning.
While businesses can reclaim this VAT, the process typically takes 45 to 120 days. During this period, buyers must find a way to cover this substantial expense, until they receive a refund from HMRC.
VAT bridging loans provide the perfect solution, offering a financial stopgap until the VAT refund arrives.
What Are VAT Bridging Loans?
VAT bridging loans are short-term financing solutions tailored to cover all of the VAT element of commercial property purchases.
These loans enable buyers to complete transactions without depleting working capital or missing out on prime opportunities due to VAT costs.
The lender covers the VAT part by way of a short term loan, and you pay it back when you get a refund on your next VAT return.
Key Features of VAT Bridging Loans
Our VAT bridging loans offer:
- Loan amounts from £50,000
- Terms ranging from 90-120 days
- Competitive interest rates
- Funding for up to 100% of the VAT amount
- Rapid approval and completion
Unlike traditional loans, VAT bridging loans prioritise the property being purchased and the validity of the VAT reclaim, rather than focusing solely on the borrower’s credit history.
Flexible VAT Funding
A VAT bridge loan can help in two ways: by providing general cash-flow help when faced with a VAT bill and funding the specific VAT element of a commercial property purchase.
For Cash-flow
When a business has to pay a significant VAT bill but lacks the liquidity to do so immediately, a VAT bridging loan can provide the necessary capital to cover the VAT obligation without disrupting the company’s cash flow.
The loan is usually repaid once the business receives its VAT refund or when its cash position improves.
You can receive your funds in as little as 24 hours from submission, and always at least 3 working days ahead of HMRC’s typical timeframe.
For Property Purchase
Commercial mortgages are used to fund the purchase of a commercial property. The maximum available would be somewhere around 70% of the purchase price, excluding VAT.
As the loan doesn’t include any of the VAT element, there is a large funding gap that needs to be covered.
A VAT bridging lender will set up a short-term loan that can pay the VAT costs, fixing the funding gap and reducing the cash-flow burden on the business.
Let’s Talk!
Eligibility
Our VAT bridging loans are available to VAT registered:
- Limited companies
- Sole traders
- Partnerships
- Special Purpose Vehicles (SPVs)
Lenders will require proof of the property purchase, details of the VAT amount, and your plans to repay the loan. The property itself serves as security.
Specialised Lending
A property purchase VAT bridging finance agreement will have a very specific and fixed purpose – To provide funding for a known amount of VAT for a short period of time, usually up to 90 days.
Repayment of the loan will occur when HMRC reimburse the tax paid for purchasing the property.
Most lenders will look to place a legal charge against a property, just to give them some extra protection, but others rely on PG’s and the validity of the VAT reclaim.
Why Choose Us?
While traditional commercial mortgages don’t cover VAT, and using personal funds or business reserves can strain your finances, our VAT bridging loans offer a tailored solution.
We are VAT bridging loan experts, and our lenders provide the speed, specificity, and flexibility you need to seize property opportunities without compromising your financial stability.
We only work with trusted and proven bridging lenders, with funds available in just a few days.
Simplified VAT Reclaim Process
We understand that reclaiming VAT can be time-consuming and frustrating.
A managed VAT recovery service can handle the entire process on your behalf:
- Preparing and submitting VAT returns
- Liaising with HMRC
- Managing any queries or issues that arise
This service saves you valuable time and effort, allowing you to focus on your core business activities while we take care of the VAT reclaim.
Need some help?
Don’t let VAT payments hinder your commercial property aspirations. Our VAT bridging loans provide the quick, flexible financing you need to seize opportunities and grow your business.
If you need a short-term VAT bridging loan then a specialist broker is a good place to start. You will get expert help and advice along with a wide range of lenders to choose from.
To speak with a specialist broker, please call us on 020 3488 5706.
