Funding your practice
In association with Wesleyan Bank: how commercial loans can help law firms bridge their funding gaps
Throughout the year, law firms will find they are hit with additional expenditure – either expected or unexpected.
Sometimes it might be possible for a practice to pay for it out of their cash reserves, but often they will need to take out a commercial loan, which is where a specialist lender like Wesleyan Bank can help.
Here are some examples of the kinds of expenditure law firms face during a year and how taking out a short- or long-term loan can help.
Twice a year the taxman places a huge strain on the cash flow of even the most well managed law firms. They may need to source funds at short notice to meet the demands of HMRC.
Quarterly VAT payments can also cause cash flow spikes which could be managed more effectively with regular monthly repayments. Wesleyan Bank arranges VAT finances at short notice, which means that by spreading payments the firm can avoid one off large payments.
Wesleyan can arrange loans that have fixed repayments over six months or less, and even pay the money directly to HMRC on the firm’s behalf to make the process easier.
Growing a business can have a direct impact on a firm’s cash flow, which means additional sources of finance may need to be sought. A commercial loan can be used for upgrading office equipment and furniture, improving IT and telecoms systems as well as carrying out acquisitions and mergers.
Professional indemnity insurance (PII) funding
PII is one of the biggest financial outlays a law firm will make each year and because it is a compulsory purchase, they cannot operate without it.
Traditionally, PII was payable every 1 October. Although the rules have now changed allowing firms to renew PII at any other time of the year, many firms have decided it is easier to keep the October renewal date. However, this means the bill for it can come just weeks after partners have just had to pay their own tax bill, placing further strain on cash flow.
Again, Wesleyan Bank has recognised these specific issues for law firms and developed loan options with repayment plans that match their requirements and paying the money directly to a firm’s chosen insurer or broker.
Purchasing a practice, either on your own or as part of your firm’s growth plans, is a major financial commitment and it is essential to work with an experienced commercial bank that can help you with the deal from start to finish.
Look for a bank with that provides you with your own dedicated Relationship Manager who will guide you from the initial enquiry to drawdown of funds, as well as offering bespoke and flexible funding options that can help to meet your business objectives.
An associate looking to buy a stake in a firm and become a partner may not have the funds readily available so will need to take out a loan.
Wesleyan Bank’s partnership loans are specifically designed to suit the lawyer’s earning profile enabling them to plan for the future with confidence.
As you near the end of your career you will be looking to sell up your share in your practice. If you are selling your share in the firm to your colleagues, they too may need to take out a loan, just as you did years before when you first became a partner.
Whatever your borrowing needs, look for a lender who has knowledge of the legal profession and who will be able to guide you through the process to ensure you get the right deal for you.
Wesleyan Bank has a team of specialist Commercial Account Managers that have expert insight into the legal profession, along with competitive rates of interest, and will be able to assist you throughout your legal career.
For more information about how Wesleyan can help your business, visit the website at www.wesleyan.co.uk or call 0808 115 8253.