Law Firm Finance
Accessing finance can help you quickly grow your law firm and stand out in a busy marketplace. We work with lenders offering tailored finance solutions for law firms. Read more below and compare law firm finance today.
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What is law firm finance?
Law firm finance is an umbrella term for specialised funding specifically designed for law firms. These finance solutions help your legal practice navigate cash flow challenges like lengthy case cycles or delays between completing work and receiving payment from your client.
Cash flow management is critical to growth. Law firm financing can help support you with things like work in progress (WIP), expansion plans, equipment purchases (e.g. laptops, secure mobile devices, software for practice management, etc.), and professional indemnity insurance.
Financial challenges facing law firms
When you’re facing extended client payment terms, but must make prompt disbursement payments, you can very quickly find yourself struggling to balance cash flow.
You still have all your routine monthly payments to make, like software subscriptions, professional indemnity insurance, and staff wages. These expenses don’t just disappear.
With close to 9,000 firms operating in England and Wales alone, it’s clear the marketplace is busy. So, to grow a successful law firm and stand out to clients, you might have to access funding throughout your business journey. But with so many loan types out there, how do you find the most suitable option? We’re here to help guide you.
Types of law firm finances
There are plenty of law firm funding options available to explore. Here are just a few of the most popular ones:
Business loans for law firms
You can apply for either a secured or an unsecured large or small business loan. But what’s the difference between unsecured and secured?
- Unsecured business loans. You don’t need security for an unsecured business loan. That means you can get your hands on up to £500,000 without risking an asset, and you can see funds in a matter of days after approval.
- Secured business loans. To apply for a secured business loan, you’ll need a high-value asset to offer the lender as collateral (property, vehicles). Although it’s riskier for you as the borrower, you can access more competitive interest rates and loan amounts in excess of £2 million. So if you’re looking to expand your law firm empire, you might need significant investment from a secured loan.
Invoice finance
If you need to access immediate cash flow, invoice finance can offer an instant solution. You can sell one or more invoices to the lender, and they front you up to 90% of the unpaid invoice amount. This is particularly useful if your clients have extended invoice payment terms.
WIP funding
When you have work in progress but your practice deals with a topic like personal injury, the work might be ongoing for several years before you bill for it. That means you’re doing a lot of the work upfront but not seeing payment for a long time. This can create a real cash flow issue. WIP funding is here to help with that. You can lend money against the work you’ve completed but haven’t billed for, so you’re not hanging around waiting for essential funds!
Disbursement funding
As a legal practice, you face paying out for a lot of upfront costs, like court and barrister fees, and medical reports. But accessing disbursement funding can help you further protect your cash flow. Covering these costs with ease means you can focus on the case at hand and repay the finance easily on a monthly basis to relieve any financial stress.
Tax and VAT loans
Being able to spread the cost of HMRC obligations without depleting your cash reserves can be very useful. Tax and VAT loans help you spread the cost with manageable monthly payments. This helps keep your cash flow protected, and you meet your HMRC deadlines without fail. It’s a win-win.
Asset finance
If you need to acquire assets, both tangible and intangible, like an office space or software subscriptions, but they cost a lot of money, then asset finance can help you secure the best quality assets to help you grow. (But without the hefty financial obligation.) Asset finance helps you enter into a hire purchase agreement or a lease. You can also use it to release money against an asset you already own.
Benefits of law firm finance
The main benefit of funding for law firms is covering financial obligations without stress or worry. Knowing you can pay staff, cover upfront costs, and avoid needlessly chasing invoice payments can give you the financial peace and freedom you need to grow.
Having cash always available means you can confidently invest in your law firm’s growth, you can take calculated risks, try a new marketing strategy, or hire team members to accelerate lead generation or speed up case completion.
How to apply for a business loan for a law firm
Applying through platforms like Capalona is quick and easy. Simply share a few details about what you’re looking for — reason for finance, how much you need, desired repayment terms, and a few business details. Then it’s time to compare eligible professional loans.
You find a product you like the look of and click through directly to the lender’s website to continue with your application. Don’t forget to collate relevant documents for the lender before applying; this can speed up your loan application process. Documents include accounts, forecasts, bank statements, proof of professional indemnity, etc.
Why choose Capalona for law firm finance?
Our business comparison tool is free for your law firm to use. It’s a self-serve platform, which means you can compare lenders at your leisure and properly weigh up which loan option is best suited to your practice.
We offer firms:
- Fast and free law firm loan comparison
- Access to specialist lenders
- Clear details about each funding option
- Rapid lender decisions and access to funds
Start comparing law firm finance solutions today, and find the best way to fund your growing legal practice.
About the author
Adrian T
5/5
Amazingly fast, efficient service, minimal paperwork. So much faster than my business bank of twelve years.
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