Using bridging loans to cover unexpected tax bills
There is never a particularly ‘good’ time to be hit with an unexpected tax bill. Even so, demands like these have a tendency to land at the worst possible times. Left unpaid, an unexpected tax bill received by a business could pave the way for heavy penalties, or even legal action.
In scenarios like these, it is commonplace for businesses to consult with major banks and lenders, regarding the secured and unsecured loan options available. Unfortunately, most also quickly find that fast-access short-term loans for these kinds of purposes are not readily available.
Particularly where a tax bill needs to be paid as quickly as possible, conventional loans are rarely a viable solution.
Short-term borrowing for tax payments
Business owners are not in the habit of allowing themselves to fall knowingly into debt with HMRC. The vast majority work hard to meet their income tax, VAT and National Insurance obligations, so as to avoid further complications down the line.
All of which can make it even more frustrating when a significant tax bill arrives unexpectedly at an inopportune moment. But there is a stopgap solution available for time-critical issues like these, which can also be comprehensively affordable.
Bridging finance is designed specifically to ‘bridge’ temporary financial gaps, enabling borrowers to avoid the potential consequences of further payment delays. Particularly when it comes to paying urgent tax bills, a bridging loan could be the best available tool for the job.
A few features and benefits of bridging loans as a solution for time-critical tax payments:
- With the help and support of an experienced broker, a bridging loan can be arranged and accessed within just a few working days.
- There are no specific limitations regarding how much can be borrowed, or restrictions on how the funds are subsequently allocated.
- Interest is charged on a monthly basis – often around 0.5% or lower – helping minimise borrowing costs when the loan is repaid promptly.
- All interest and borrowing costs can be rolled-up into the final lump sum loan repayment, meaning no monthly payments in the interim.
- Applicants with poor credit can qualify for competitive bridging finance, as can those with no formal proof of income.
- Repayment terms are flexible, varying from 1 to 18 months depending on the requirements and preferences of the borrower.
The interest and additional borrowing costs payable on a bridging loan could be significantly lower than the penalties that apply in the case of non-payment of outstanding tax. Far from a costly facility, a timely bridging loan could therefore save a business time, money and a great deal of stress.
Act early…
As it is impossible to rule out all possible delays and disruptions, acting early is essential. Consult with an independent broker the moment you encounter any issues such as this, who may be able to seek pre-approval on your behalf from a reputable lender.
After which, getting your hands on the money you need to keep HMRC happy could be surprisingly straightforward.
