What is a VAT loan and how does it help cash flow?

2 min read

Spread the billWhat it does

Protects cashThe benefit

Short-termTypical term

What it means

A VAT loan funds your quarterly VAT payment so you can spread it over several months rather than paying HMRC a lump sum on the deadline. It is a form of short-term working-capital finance aimed at one predictable, lumpy cost. The VAT calculator helps you see the bill coming.

When it helps

It suits businesses where a large VAT bill lands just as cash is tight, so paying it in full would squeeze operations. Spreading it keeps working capital intact. The best long-term fix, though, is a sinking fund that saves towards VAT monthly — a VAT loan is the bridge when the bill arrives before the fund is ready.

What it means for you

Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.

Frequently asked questions

Is a VAT loan worth the cost?

If paying VAT in one go would starve the business of working capital, spreading it can be worth the interest. If you could pay it comfortably, saving towards it in a sinking fund is cheaper. Weigh the two.

Can I use a general facility instead of a VAT loan?

Yes — a revolving facility can cover a VAT bill and anything else, giving more flexibility than a single-purpose VAT loan. Compare the cost and flexibility of each for your situation.