VAT, or value-added tax is a tax charged on the sale price. VAT loans are special loans offered by banks when companies fail to meet their VAT payment deadlines. If you are thinking about starting a vending machine route, the road to profitability can be costly. Thankfully, this blog post provides you with important information about how VAT loans can provide relief for achieving steady growth without any worries!
VAT Loans are an excellent tool to use in bad economic times if you're looking for a balance of low risk and low-interest loans. These loans can help businesses get the cash they need to take their entrepreneurial spirit to the next level! VAT loans allow business owners to have a line of credit in the event that they're unable to pay for imports.
Why should I use a VAT loan?
If you’re responsible for the cash coming into your business, you know how difficult it can be to make ends meet. You might have thought about taking out a loan at some point, but simply never had the capital. If this is the case, you should explore VAT loans as an option for restructuring your finances and getting more cash flow today!
VAT loans are an effective method for short-term financial leverage when the company has insufficient funds or planning requirements to fulfil in order to qualify for bank financing. Adsum provides VAT loans with flexible terms and competitive rates that enable working capital needs.
The benefit is especially advantageous when importing inventory from overseas. Businesses can purchase the goods, pay the VAT and interest when they arrive in port, and then not have to worry about being able to afford the goods until their next shipment arrives.
What are the drawbacks of a VAT loan?
There are advantages and disadvantages to using VAT loans. But, they are usually lower risk than alternatives like overdrafts. VAT loans are often designed for companies who need a loan quickly with an option to take payments over a 12-month period.
1) As a businessperson, you have to have a minimum of 25% equity in the company. If you don't, then you would need to sign a personal guarantee before getting a loan.
2) The borrower's credit rating must be a B or above.
3) After five years or more of paying your debts on time, your credit rating may recover enough to take out investment capital.
4) Interest rates are higher than an unsecured personal loan and commercial loan.
5) These loans add one more aspect to your business plan.
Conclusion
VAT Loans need not be a foreign concept to your business. Getting that working capital can be an excellent way for your company to try and combat the ups and downs of finances; especially if it has grown past its regular cashflow. There are many other things VAT loans can do for you, such as encourage international growth and protection against currency fluctuations - like what happened earlier this year in USD/UK sterling. It is the perfect way to stay afloat while you try and figure out where all of your irregular expenses are coming from!
Adsum team has been working with investors, debt finance specialists, and R&D advisors for years, so we all know the market better than anyone. If you would like a no-obligation recommendation for a specialist that matches your business/purpose, simply contact us.
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