White Oak, a UK non-bank lender, has seen a strong uptick in its VAT lending offering since the start of 2023, as business confidence continues to increase.

So far this year, the firm has reported an 83% year-on-year increase in its VAT lending offering – amounting to a 139% rise in VAT lending overall since the start of 2021.

VAT financing

In a statement, White Oak said this increase shows the UK’s small business economy is well on the trajectory to post-pandemic recovery despite strong economic headwinds with rising costs and interest rates.

Firms across professional services, support services and manufacturing industries recorded the highest average VAT bill of all sectors, following a rally in business activity. With increased revenue leading to higher VAT bills, spreading the cost of these payments allows small businesses to manage their cash flow more effectively. The average size of VAT funding packages averaged at £53,000 in the first quarter of the year – which marks a 20% increase on the figure for 2020.  

White Oak has lent over £167m to SMEs across the country in 2023 to date – £101m of which was lent from its own book.  White Oak’s short-term lending offering makes up £75 million of this figure, providing businesses with rapid funding solutions to ensure they can maintain growth and manage their cashflow.

Andy Davies, managing director of leases and loans at White Oak, said: “With larger VAT bills being a natural by-product of stronger business activity, the steady increase we are seeing is a clear sign that SMEs across the country are emerging resiliently from the pandemic and reviving their plans for growth. We often look at the demand for VAT lending as a barometer for overall business performance, and the latest figures show are providing us with renewed optimism.

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“While we are still operating in a difficult backdrop with high-interest rates and rising costs, more and more small businesses have been turning to alternative lenders to plug the financing gap. Our VAT lending offering is renowned for its quick turnaround time, ensuring SMEs across the country receive the support they need to succeed and grow when it’s needed most.”