Why Businesses Use Bridging Loans for Tax Payments
A business owner hit with an extensive or unexpected tax bill at the worst possible time will know just how distressing the whole scenario can be. Faced with the threat of heavy penalties or legal action unless paid, your current cash flow may make doing so impossible.
In such situations, it is not uncommon for businesses to consider various types of secured and unsecured loans however the problem being that not only are most major banks unwilling to lend for these kinds of purposes, but arranging the loan would take far too long if they were.
Anticipating all Eventualities
Technically speaking, the best way to avoid these issues is to plan for the unexpected as predicting and budgeting for most tax outgoings is perfectly possible when everyday accountancy practices are used.
Nevertheless, errors and oversights can happen in any business, including unexpected tax liabilities. Sales of capital assets can also bring capital gains tax into the equation, often constituting a significant expense.
The standard 20% VAT levy when purchasing properties for business purposes is well known for causing severe financial difficulties. VAT-registered companies can reclaim their VAT payments at the end of the current accounting period, but still need to find ways to raise the money in the meantime.
Short-Term Borrowing for Tax Payments
In all the above situations, an affordable bridging loan could represent the ideal option. Bridging loans differ from conventional loans, in that they are designed for short-term requirements. Interest is charged monthly (from as little as 0.37%), with the full balance of the loan including interest usually repaid within 1 to 18 months.
Additional features of bridging finance include the following:
- Simplified applications with flexible lending criteria
- Access to the required funds can be within a few working days
- Various standard and non-standard security types are accepted
- Early repayment available at no additional charge
- Applicants with a poor credit history are considered
- No monthly repayments necessary
Most importantly, a bridging loan can prove exponentially more affordable than the costs of non-payment of tax obligations. Along with avoiding potentially excessive fines and penalties, ensuring you keep on top of your taxes is essential for keeping HRMC off your back.
Eligibility for Bridging Finance
Qualifying for a bridging loan for tax payments (or anything else) can be as simple as providing an appropriate asset as security. Bridging finance can be secured against a wide variety of property types, with much greater flexibility than a conventional secured loan.
Even if you have poor-credit or a history of bankruptcy, you still have a chance of qualifying for bridging finance.
For more information or to discuss your requirements in more detail, contact a member of the team at UK Bridging Loans anytime for an obligation-free consultation.