With the online tax return deadline fast approaching at the end of the month, many entrepreneurs and small business owners will be struggling to find the cash they need to make sure payments are made on time. Inflation may be starting to fall, but interest rates remain high and are continuing to tighten cash flow for many businesses across the country.

As this strain on finances continues, more and more SMEs are turning to alternative funding solutions to help bridge the gap. Over 2023, UK non-bank lender White Oak saw a 10% year-on-year increase in demand for its VAT and tax lending solutions and provided over £75 million in funding to meet its customers’ needs.

This significant uplift comes after a challenging year for the small business community, seeking extra capital to manage the impact of high inflation tightening cash flow. However, analysis of White Oak’s 2023 lending data points towards a more positive trajectory for the year ahead.

Across the last quarter of 2023, White Oak supported its customers with an average VAT bill size of £62,000. This figure is 30% higher than the average bill funded in 2020 – marking a significant increase since the pandemic began.

Higher VAT bills are often taken as an overall sign of business health, with larger revenues leading to larger payments. As such, this notable rise indicates that the UK’s small businesses are starting to bounce back from the effects of the pandemic – even in the face of increased financial pressures like high interest rates and sticky inflation.

Jean-Marc Torre (pictured), CEO of White Oak, said, “The small business community has undoubtedly faced a long road of hurdles over the last few years and, while the outlook for 2024 still looks muted, we’re seeing continued resilience among our customers. For many, the pressure of paying VAT and tax bills creates the biggest gap in their financing mix, so easy access to capital to bridge that gap and continue on their growth journeys is vital.”

Supporting a diverse range of industries with their financing needs, White Oak saw particular demand for funding from the professional services sector last year, which accounted for almost half (48%) of its total VAT and tax lending in 2023.

London (21%), the North West (15%) and Yorkshire and the Humber (10%) received the most VAT and tax funding from the firm in 2023, but White Oak’s lending data indicates demand was spread across the country, with businesses throughout the UK still relying on quick access to funding to make their VAT and tax payments on time as cash flow remains tight.

Andy Davies, Managing Director, Leases and Loans, at White Oak, said, “Businesses can often be caught out at the start of the year, with January’s online tax return deadline coming up quick after the holiday break. The reinstatement of late payment penalties last year really underscored the importance of having easy access to funding when it’s needed most. Our tax and VAT loans are designed to be quick and reliable to guarantee our customers can get their payments in on time no matter what obstacles they might be facing.”