Can I finance my hotel’s VAT, tax bills or supplier payments?

Short answer: Yes — many hotels can use short-term finance, invoice finance, merchant cash advances or specialist trade finance to bridge VAT, HMRC tax bills or supplier payments. Which option suits you depends on timing, trading history, security and cost. If you’d like a quick eligibility estimate, Get Quote Now — Free Eligibility Check.

Quick answer — yes, but it depends

Hotels often face seasonal cash shortfalls: VAT and PAYE fall due regardless of room occupancy. Lenders and invoice finance providers can release funds to cover these obligations, but offers depend on your revenue profile, VAT/PAYE history, security and how quickly you need funds. Before borrowing, consider HMRC options such as Time to Pay arrangements — borrowing may be sensible for speed, but HMRC is a priority creditor and lenders will treat tax liabilities accordingly. If you want to see which options you qualify for, Get Quote Now — Free Eligibility Check.

Typical finance options for hotels

Here are the most common routes hoteliers use to bridge VAT, tax or supplier payments:

• Short-term business loans / bridging loans: Fast lump-sum funding to meet an imminent bill. Useful for one-off timing gaps; typically secured or requiring director guarantees.
• Invoice finance (factoring / discounting): Release working capital against unpaid invoices (e.g., corporate or travel agent bookings). Ideal if you have large B2B invoices.
• Merchant cash advance / sales-based finance: Lenders advance funds against future card takings. Flexible repayments tied to daily/weekly sales — useful for seasonal businesses.
• Overdrafts & revolving credit lines: Short-term facility for ongoing cashflow management; speed and cost depend on bank relationship.
• Supply chain or purchase order finance: To pay suppliers upfront for bulk orders or refurbishment stock.

Pros & cons at a glance:

• Speed: merchant cash advances & short-term loans are fastest (24–72 hours sometimes).
• Cost: sales-based finance and short-term loans can be expensive; invoice finance rates vary by advance level and debtor quality.
• Suitability: invoice finance suits hotels with significant B2B invoices; merchant cash advance suits hotels with stable card volumes.

If you’re ready to compare options, Get Quote Now — Free Eligibility Check.

Financing VAT specifically — what hoteliers need to know

VAT payments follow the VAT return cycle. If quarterly VAT falls due after a busy period (for example a busy summer quarter), you can find yourself short before takings catch up. Finance can bridge that gap, but lenders will want to see VAT filing history and evidence that VAT returns have been made on time in the past.

Practical points:

• Lenders rarely lend purely against a future VAT refund — they want a broader view of trading cashflow and debtor quality.
• Invoice finance can be a direct match if you have invoices to cover the VAT bill (for example corporate events invoiced to third parties).
• Some providers offer short-term loans specifically to pay VAT, often up to amounts you’d reasonably repay within a few months.

Example: a 30-bedroom hotel with strong summer takings owes £30k VAT in October; the owner uses a short-term loan to pay HMRC and repays after strong November/December bookings. The lender required last 12 months VAT returns and three months’ bank statements.

Important: lenders may require confirmation of VAT returns and precise use of funds. If you’d like introductions to lenders who understand hospitality VAT timing, Get Quote Now — Free Eligibility Check.

Financing HMRC tax bills (PAYE, Corporation Tax, VAT)

HMRC itself offers Time to Pay arrangements for businesses that can demonstrate a short-term problem. Generally, speak to HMRC first if you can — they may allow instalment plans without the cost of third-party finance.

When borrowing to pay HMRC consider:

• HMRC is a priority creditor — being behind on tax can affect insolvency outcomes.
• Lenders will factor unpaid taxes into risk assessments; some will not advance funds if historic arrears suggest ongoing issues.
• Security: lenders may ask for personal guarantees or charges over assets for larger amounts.

Practical scenario: seasonal payroll spikes (e.g., summer staff) require additional cash to cover PAYE. A merchant cash advance or short-term loan can provide funds quickly. Always weigh the financing cost against possible HMRC penalties and interest if you don’t agree a plan with HMRC.

Financing supplier payments & trade creditors

Hotels often need to pay suppliers in advance for refurbs, bulk food/drink orders or event supplies. Options include:

• Invoice finance: Use outstanding invoices to unlock cash; good for hotels with corporate accounts or agent bookings.
• Purchase order / supply chain finance: Lenders pay suppliers directly based on approved purchase orders.
• Short-term loans: Lump-sum to cover supplier invoices.

Use-case: a boutique hotel with a scheduled refurbishment needs to pay contractors up front. A purchase order finance facility or a short-term loan can be arranged to cover supplier invoices, repaid as occupancy recovers.

Read more about specialist hospitality finance options on our hotels business loans page for sector-specific lenders and solutions: hotels business loans.

Eligibility, documentation and what lenders/brokers will ask for

Most lenders and brokers look for similar information. Prepare these documents to speed up decisions:

• Last 3–6 months’ business bank statements
• Latest VAT returns and payroll summaries (PAYE) where relevant
• Management accounts / P&L and balance sheet for the last 12 months
• Details of outstanding invoices (for invoice finance)
• Evidence of bookings or forward revenue where merchant cash advance is used

Typical criteria: minimum trading history (often 12 months), proven card/debit turnover (for MCA), clear debtor profile (for invoice finance) and acceptable director credit (depending on lender). UK Business Loans helps you prepare and match to providers who ask for these items.

Costs, risks and lender treatment — be careful

Costs vary widely. Examples (indicative):

• Short-term cashflow loans: fees + APRs that can be high for 1–3 month facilities.
• Invoice finance: discount rates typically 0.5%–3% of invoice value per month depending on risk and advance rate.
• Merchant cash advances: factor rates often 1.2–1.6 (repayable via percentage of daily takings).

Risks to consider:

• Debt stacking: using multiple high-cost products can trap businesses.
• Security: personal guarantees or charges over property are common for larger loans.
• Failure to repay: late payments to HMRC or lenders can lead to enforcement actions.

When is borrowing appropriate? When it’s a short-term, predictable gap that will be closed by upcoming revenue or confirmed invoices. If cash shortfalls recur, consider restructuring or longer-term working capital facilities.

How UK Business Loans can help

We don’t lend. We match hotels with lenders and brokers who specialise in hospitality finance — from invoice finance to short-term loans and merchant cash advances. Our enquiry form is quick and non-binding; it simply gives us the information we need to introduce you to suitable partners. Typical loans and facilities we arrange start at around £10,000 and upwards.

Benefits of using our service:

• Save time — we present lenders who understand hotel seasonality.
• Confidential, no-obligation matching.
• Faster responses — many partners reply within hours.

Ready to compare options? Get Quote Now — Free Eligibility Check.

Typical case studies (anonymised)

Example 1 — VAT bridge: A coastal hotel owed £25k VAT after peak season. Invoice finance against corporate event invoices provided an 80% advance, enabling the owner to settle HMRC and avoid penalties. Outcome: cashflow stabilised, fees recovered over two months.

Example 2 — Payroll peak: A boutique hotel needed £15k for summer PAYE. A short-term unsecured business loan (repayable in 90 days) covered payroll until regular takings resumed.

Example 3 — Supplier finance: A hotel group negotiated supply chain finance for bulk beverage orders for a festival weekend. Suppliers were paid early; group repaid the facility from event income.

FAQs

Next steps & call to action

Get a free, no-obligation eligibility check and we’ll match your hotel with the lenders/brokers most likely to help. The enquiry form is just information — not an application — and takes about two minutes. Get Quote Now — Free Eligibility Check.

Regulatory & compliance disclaimer

Important: UK Business Loans is an introducer — we do not provide loans or regulated financial advice. We connect businesses to lenders and brokers who may be able to help. Using our service is free and no obligation. Completing an enquiry does not affect your credit score. Always review lender terms and confirm regulatory status before proceeding.

1. Can I use a business loan to pay VAT or other HMRC tax bills?
Yes — many hotels use short-term loans, invoice finance or merchant cash advances to pay VAT, PAYE or Corporation Tax, but always consider HMRC Time to Pay options and compare costs first.

2. How quickly can I get funds to cover VAT, payroll or supplier payments?
Some providers can release funds within 24–72 hours once paperwork is complete, with timescales varying by product (MCA, short-term loan, invoice finance) and documentation.

3. Will submitting an enquiry via UK Business Loans affect my credit score?
No — completing our enquiry form is not an application and does not affect your credit score, though individual lenders may run checks if you proceed with a formal application.

4. What finance options are best for seasonal hotels facing VAT or PAYE peaks?
Seasonal hotels commonly use merchant cash advances, invoice finance or short-term cashflow loans because lenders can assess predictable seasonal takings and tailor repayment profiles.

5. What documents do lenders typically ask for when financing VAT or supplier bills?
Lenders usually request recent business bank statements (3–6 months), VAT returns, payroll summaries, management accounts, debtor lists and evidence of bookings or purchase orders.

6. How much does it cost to bridge VAT or supplier payments with short-term finance?
Costs vary widely — short-term loans and MCAs can carry high APRs or factor rates, while invoice finance discount rates typically range around 0.5%–3% of invoice value per month depending on risk.

7. Can I arrange finance to pay suppliers directly for refurbishments or bulk orders?
Yes — purchase order / supply chain finance and supplier-payment facilities allow lenders to pay suppliers directly against approved purchase orders or invoices.

8. Are loans available if my hotel has imperfect credit or limited trading history?
Some specialist lenders and brokers work with hotels with poor credit or shorter trading histories, though they may require higher rates, more security or director guarantees.

9. Will lenders ask for personal guarantees or security when financing tax or supplier payments?
Lenders commonly request personal guarantees or charges over assets for larger facilities, with the level of security depending on loan size, trading history and facility type.

10. Should I contact HMRC before borrowing to cover tax liabilities?
Yes — speak to HMRC about Time to Pay arrangements first because they may offer instalments without third‑party costs and lenders will treat HMRC as a priority creditor.