‘We are a little bit niche. We are not your average bridging lender’

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vat bridging

London based FinTech Adsum is joining the Bridging Loan Directory to further fuel the growth of its niche UK tax refund finance and VAT Bridging services.

Adsum is a market leader in U.K. tax receivables financing, providing working capital and bridge loans secured against HMRC tax refunds.

It bridges the funding-gap between payment of VAT on asset, property and stock purchases and receiving the corresponding tax refunds from HMRC, providing liquidity secured on borrowers’ balance sheet tax assets.

It lends against all tax receivables such as VAT, R&D, video games and movie tax credits. It is also expanding into import VAT.

“We are a little bit niche. We are not your average bridging lender,” says Mike Underwood, newly appointed head of origination. “We are a specialist tax receivables lender providing a fantastic product for businesses experiencing cashflow issues or purchasing large assets.”

Underwood says the bulk of demand to date has come in the commercial property sector either businesses acquiring new buildings or developers buying new sites.

“A lot of senior debt providers will be lending 60% to 70% of the purchase price which means the funding gap increases when VAT is taken into account,” says Underwood.

“They are spending a large sum at the front end and not being able to recover the VAT payment from the HMRC for over 3 months.

Our short-term loans allow businesses such as property developers to retain a bit of capital to help start their building works, buy materials and get cracking on with their next site. Their money isn’t being tied up.”

Interest in Adsum’s services is also increasing among trading businesses looking for working capital solutions.  Indeed, the Bank of England has stated that there is a £22billion SME funding gap and Adsum believes it can help address it.

“This is from contractors buying materials or vehicles for their fleets which they pay VAT on. We also recently helped a company buying a large amount of Personal Protective Equipment,” Underwood states.

“We are tax experts and offer a free service to potential clients advising them on how they can use their VAT situation to secure our three-month term loans. Our rates vary depending on the project, but we are very competitive and at all times we ensure that it makes financial sense for the client.”

Its use of technology is also helping it gain and retain clients.

“Our in-house developers have designed codes and processes to make the customer journey and user experience as smooth, reliable and fast as possible,” says Underwood.

“Our clients get automated term sheets which when they click a button sends them through to a Teams call with one of our VAT experts.

They have a log-in to an online client management platform where along with their broker and solicitor they can see the progress of their loan application and upload documents.

This is a generation of instant information and as such we are bringing in push notifications so clients can see on their mobile phones exactly what stage their loans have reached and if they need to take action of any kind.”

Despite the growth in scale and demand, aided by the property boom in the pandemic, Underwood says better understanding of tax receivables is needed.

“It is a fairly new type of product and one of the things we are always trying to get across to brokers and potential customers is that ‘Hey we are here!” he says.

“However, anything with tax in the title makes some brokers naturally cautious especially if their expertise is in property development finance. But this is a product that should be in the kitbag of every commercial broker in the country.”

Joining the Bridging Loan Directory will help in that aim.

“We wanted to join a platform which would give us greater publicity and also allow us to be informative and educational about the product,” he explains.

“This is a growing sector and one with huge pent-up demand. There is a natural entrepreneurship drive in the UK with people and businesses wanting to get on with their projects. We can help them do it.”