Business Finance for Solicitors

In the United Kingdom the legal profession is growing at an increasing pace as new graduates enter the market. According to the Law Society, there are around four times the numbers of legal professionals as there were 40 years ago. That means both increased opportunity, and increased competition across the entire market space, with firms competing on every level.

Of course, as with every other professional services business, if you can identify gaps in the market and capitalise on them to seize opportunities and outperform your competitors, you can get ahead and secure more clients. To do this, you will likely need to invest in growing your business - so you will need adequate funding.

However, as a Solicitor or Barrister, your funding needs may be beyond the scope of general lenders and products like business loans. The nature of the legal profession means that specialised lenders may be required as some of your assets and liabilities are less tangible and more risk-laden than a traditional 'goods'-driven business. 

At Rangewell, whether you are a sole practitioner or a partner in a large multi-partner firm, we know the lending market inside and out and can help you find the right lender for your legal firm. We'll work with you to identify the perfect partner and then tailor your application to increase your chances of success. Click below to get in touch about our help in finance for solicitors. 

Understanding your funding options

As a solicitor, you will have many different costs that are either direct requirements for the business or are things that can help you grow. From paying off existing debt to investing in a new marketing function, the right finance at the right time can make or break a business. There are many different areas that a solicitor's loan can help with, including: 

• Cashflow - funding for long cases
• Aged Debt Funding
• Disbursement Funding
• Insurance for Professional Indemnity
• Purchasing office equipment and computer hardware
• Funding for tax and VAT
• Funding your premises
• Acquisitions, mergers, buy-ins/buyouts

The challenges solicitors may face:

Cashflow

Getting your cashflow running smoothly is a challenge for every business. In the legal profession, the problem may be particularly acute, as you must wait for payments on major cases that can stretch on for months. Uncertainty in cashflow is never a good thing, so finance can step in and plug the gap. 

Issues with aged debt and disbursements can drain your reserves, while simply providing operating funds during a long and complex case may cause issues. At Rangewell, we can arrange for several funding options which can offer solutions to cash flow challenges both short and long-term. 

Revolving Credit Facilities

An overdraft used to be a simple solution for businesses but, even for legal professionals, overdrafts may now be very difficult to arrange. Many banks simply cannot provide the level of funding you need under their lending rules.

Revolving Credit Facilities can be a versatile alternative for modern solicitors. They provide a line of credit, with an agreed limit that you can call on when you need it. You only pay for the money you take out, so it can be a cost-effective way to raise funds if you need them.

Find out more about Revolving Credit Facilities.

Working Capital Finance

Working Capital Finance is another solution. This is a loan used to provide cash to pay staff and suppliers while awaiting payments. It is usually designed to be repaid in the short- to medium-term, once the practice is fully on its feet.

Find out more about Working Capital Finance.

Unsecured Lending

If you are burdened with significant aged debt, you might want to consider an unsecured business loan, which will enable you to deal with the problem on a schedule that you set yourself.

Find out more about Unsecured Business Loans.

Insurance for Professional indemnity

Your professional indemnity insurance may be a major expense, particularly if you work in sectors such as the corporate commercial sector, where liabilities may potentially reach into the millions. There are a number of ways to provide for the costs. A short-term loan may be one of the simplest solutions when your policy requires renewal.

Find out more about short-term lending.

Office equipment and computer hardware

Your office and the efficiency of your entire business will depend on having the right equipment. The right computing hardware and software have become central to almost every activity, and your hardware, software and network will all be major costs.

While a solicitor's office may not seem particularly equipment-intensive, you You will also need to furnish your office, and you may need to provide vehicles.

Asset Funding may provide the most cost-effective solution for most of your equipment needs. There are several types of Asset Funding for you to consider. You may prefer Hire Purchase for items that you wish to keep, such as desks, chairs and document storage. Leasing may be more appropriate for such things as your IT, as it will allow you to update to the latest and most reliable technology whenever you need it. Contract Hire is another option and might help you reduce the costs of providing vehicles for your business.

At Rangewell, we can help you find the most appropriate Asset Funding solutions for your needs.

Getting the right type of business finance for solicitors

At  Rangewell, we work with lenders across the UK market and can help you secure the most competitive Secured and Unsecured business loans.

There are two main types of business loans:

• Secured Loans are ‘secured’ because you need to provide security which the lender will take if you cannot pay the loan back. This could be your home or even your business premises. They can be used to borrow large sums of money, often of £250,000 or more.
• Unsecured Loans can be suitable for smaller sums from £5000 upwards, although it's worth noting that some lenders will not let you borrow more than one month’s turnover with an unsecured loan.  

We can help you find the kind of loan that is most appropriate for your circumstances.

We can also help with a number of specialised solicitor loan products:

Tax Loans

Planning ahead for your tax liabilities is part of good company management, but a large quarterly VAT or annual tax demand can still cause problems with your cash flow, particularly it falls at the same time as other costs. Tax Loan facilities can help you to spread the cost of your tax demands into affordable monthly payments.

• Better control of cash flow
• Fixed monthly payments
• Quick and simple to arrange
• Avoids issues with HMRC, potential penalties and professional liabilities

Practice Loans

As a legal professional, you have a special status, and represent an excellent prospect for lenders. A practice loan recognises this status and may allow you to arrange an unsecured loan at an exceptionally low rate. The funds may be used for virtually any business purpose, including equipment, property, or tax liabilities.

Contact us to find out more about Practice Loans.

Buy-ins/buyouts

If you are relatively new to the profession may wish to buy into an existing legal practice as a partner, or even buy it outright.

If you already own an established practice, you might want to consider acquisitions, mergers or expansion. However, the costs involved may be substantial.

We can help you secure a number of solutions to let you buy into an established practice, including a Partner Equity Loan. This can take the form of an interest-only loan with a term of up to 25 years, which can be the most appropriate way to buy into a practice.

Other solutions can include secured loans - with the security provided by assets such as property, or even the practice itself.

Find out more about solutions for funding buy-ins or buyouts.

Growth Finance

Large-scale finance can be vital if you have major plans such as acquiring a competitor. Growth Finance may be the most cost-effective way to get the help you need. Lenders may require an established trading history and record of profits, but it may be possible to arrange Growth Finance based on your profit projections, rather than on your trading history.

Funding your premises

Premises can represent a major investment for any business. The cost of renting a suitable office will depend on your location, and the square footage you need - it may be best to take on more space than might be strictly necessary to allow you to take on staff or partners in the future. There may be service charges and business rates on top of the bare lease. You may need upfront funding to secure the agreement - we can provide a number of solutions to help you.

However, renting means ongoing costs, and puts your practice at risk of rent increases. Buying your premises with a Commercial Mortgage may often actually decrease your monthly outgoings and provide you with a valuable asset for the future. Commercial Mortgages operate much like a residential mortgage but are secured on commercial property and arranged on an individual basis. As a lawyer, your professional status could help you secure a particularly competitive deal.

You can also use a Commercial Mortgage to provide finance for other business needs. By taking a mortgage on premises you already own, in effect using them as security for a loan, you may, for example, be able to raise sufficient funds to acquire another practice.

Find out more about a Commercial Mortgage.

How we help you capitalise on your legal practice

At Rangewell, our expertise in the professional services sector means we can help you. Whether you need to capitalise your business, invest in new equipment or assets, fund capital expenses, working capital or growth.

We know the lenders who can offer the most competitive rates for the legal profession, and as well as conventional loan products, we can help you find Alternative Funding, using new loan providers and innovative funding solutions.

Whether you have a straightforward finance need or require a complicated ‘Jigsaw’ funding plan made up of a combination of products, we can work with you to find the answers that are right for your needs. Call us now to get our experts working for you and your practice.