Property VAT Funding Loans – Commercial

Property VAT funding

Commercial Property VAT Funding

Firstly when you are looking to purchase a Commercial Property the last thing many would think about is the added VAT element. This can increase the purchase price by 20%. If you haven’t budgeted for this extra cost then property VAT funding is what you need.

If the property you are looking to purchase is VAT registered then this will increase your purchase price by 20%. On smaller purchases this can be absorbed, however, on larger property purchases it can add up.

For example, if you are buying a £1 million property then you must account for the additional VAT of £200,000.

What is a VAT Bridge Loan?

Commercial bridging loans are a great way to help finance the VAT element on a commercial property purchase.

A bridging loan is a short-term loan to help bridge a gap until the loan is able to be paid back. With reference to Property VAT funding the loan is repaid back by HMRC when the reclaim has been successful.

Furthermore as a business you can now obtain a loan for 100% of the VAT element due on a commercial property.

After a loan has been provided the lender will also complete the reclaim paperwork on your behalf. This means that you do not need to deal with the HMRC which can often take months.

How much can I borrow?

Property VAT funding loans can be provided from £50,000 to £5,000,000.

How long does the process take?

It takes on average 7 working days from application to funding being provided. It can be quicker if needed depending on the applicant and speed of response with paperwork.

What are the fees?

The fee will be 2% of the VAT element as well as a 0.0495% interest rate per day it takes to recover from HMRC, which is normally 75 days, as well as general legal fees.

As an example, if the VAT loan was for £100,000 the lender will provide 100% of funding minus their fees. This would mean that a loan of circa £95,000 would be made available.

Case Study

A developer had reached their loan to value limits on the project and were contemplating using profit share finance to pay the VAT element of the transaction. Following an initial meeting and a visit to the property the VAT loan was arranged.

The loan allowed the developer to reduce the level of contribution required from their development partners. This allows them to retain a greater share of the overall profits of the project

How do you apply?

You can apply for a Property VAT loan by calling us directly on 0161 8211478 or by entering your details below.

    Commercial Property News

    What is a VAT Loan?

    A VAT (Value Added Tax) loan is a type of loan that is designed to help businesses finance their VAT payments.
    A VAT loan is a loan that can help businesses cover their VAT payments and manage their cash flow.

    What is a VAT Bridging loan?

    A VAT bridging loan is a short-term financing option that helps businesses to cover the cost of their VAT bill while they wait for payment from their customers.
    It is a type of bridging loan that is specifically designed to help businesses manage their cash flow when they have a VAT payment due, but are waiting for payment from their customers.

    How does a VAT loan work?

    The business applies for a VAT loan from a lender, usually a bank or other financial institution. The lender will review the business’s financial information, credit history, and other factors to determine whether to approve the loan.

    Receiving the loan: If the lender approves the VAT loan, the business will receive the funds from the lender. The loan amount will be based on the business’s VAT payment amount.

    Paying the VAT: The business uses the loan funds to pay its VAT bill to the government.

    Repaying the loan: The business then repays the VAT loan to the lender, typically over a set repayment period. The loan may have a fixed or variable interest rate and may be secured or unsecured.

    It is important to carefully consider the terms and conditions of a VAT loan before taking one out, and to ensure that the loan is affordable and manageable for the business. Businesses should also make sure that they will be able to repay the loan on time to avoid additional fees or penalties.
    VAT Loans



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