The document discusses various options for law firm financing, including: - SBA loans, which are the easiest and quickest funding option but have a lengthy application process. - Bank loans, which have more flexible terms than SBA loans but a shorter approval timeframe of 2-6 weeks. - Term loans, which are best for those who don't qualify for SBA or bank loans due to poor credit. - Business lines of credit, which provide flexible access to cash as needed but require good credit to qualify.

1. SMALL BUSINESS
LOANS FOR LAW
FIRM IN 2019
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2. Starting law practice is a rewarding field and
keep you motivated as well especially when
it makes a big difference in the lives of your
clients. There is also a lot of competition with
these rewards and attorneys will need law
firm financing to survive and grow among the
competition or even start a law firm.
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3. SMALL BUSINESS LOANS
The process of getting law firm financing is alike a small
business loan process. You need cash for your law
office before new prospects coming in, budget for
recruitment, inventory, payroll, equipment, and for any
expansion plans.
There are many benefits of getting law firm financing as
compared to other industries. First off, you’re already in
strong position to get quick funding for your work within
a high-paying field. There are also law firm based
financing sources, which makes it easier to secure
capital as compared to other sources.
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4. LAW FIRM
FINANCINGThe law firm financing options are from traditional
loans to term loans, or alternative financing that don’t
require collateral or personal guarantee in order to
secure capital. Here are some of the top small
business loan options for your law firm, with tips to
make your loan application a success.
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5. SBALoans
Small Business Administration loans
are the easiest and quickest funding
option for lawyers looking to start or
expand their law practice. These loans
are approved by the banks and are
partially guaranteed by the federal
government up to 85% of the loan’s
total, allowing lenders to approve your
loan application quickly. Most
traditional lenders consider lending to
small businesses a risky investment—
they’re comfortable in working with
businesses with a good and
longstanding credit history.
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The SBA 7(a) loan program is the best option for law firm financing.
This loan option offers large loan amount to fit any type of financial
needs and can be used for any purpose. In addition, longer repayment
terms and lower interest rates are another major benefits of SBA 7(a)
loan program. Remember, the SBA loan are highly competitive and the
application process takes time, based upon how much information is
required. So, if you’re in need of quick money, and can’t wait for that
longer period to get approval, its best to consider other funding
opportunities.
SBA Loan Group is another lender
that provides specific loans to law
firms, with terms up to 25 years.

6. If you can’t wait enough to get an SBA loan, or if the time is of
the essence, you should consider a regular bank loan. Bank
loans are another best funding options for law firm financing
with competitive terms and flexible interest rates, based on
your loan size and credit history. Most banks are reluctant to
approve funding to small businesses because of a proven
business track record.
If your law firm is generating good revenue with lower overhead
costs, you’re better positioned for bank loans than other small
businesses. Meaning you can even afford to pay more in
interest if you go with bank loans as compared to SBA loans,
but you’ll likely get quicker decision, being it the great option
when you need cash fast.
Bank Loans
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7. Typically the loan approval process of bank loans take
two to six weeks, which might be longer for your needs.
Term loans offer quick access to cash—sometimes even
within 24 hours and without any restrictions on when and
how you use the money. These loans come in short term
loan and medium term loans.
Keep in mind, short-term loans are expensive and usually
have higher interest rates, and may have daily or weekly
repayment terms based on the loan type you choose.
Applying for SBA loans or bank loans should be your first
choice for law firm financing, but if you’re unable to
qualify, term loans can be the best option for you.
Term loans are another
funding option for law firm
financing. These loans are
your best bet especially
when you have a poor
credit history, making SBA
loans and bank loans
unlikely for you.
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03TERM
LOANS

8. A business line of credit
provides quick periodic
access to cash—being it the
most suitable law firm
financing option. Instead of
getting a large sum at once, a
business credit line allows
you to take out the money
when you need it. The best
thing about a credit line is that
you only pay interest on the
money you borrow against
the total credit amount
provided by the lender.
LAW
FIRM
FINANCING
A business line of credit works similar to a
business credit card. You can withdraw
cash for any need within the term that the
line of credit is open. In addition, you don’t
hit hard with higher interest payments on
the money you don’t use. A business credit
line works best for established law firms
that need cash to pay periodic purchases.
The only downside of a credit line is the
good credit score requirement along with a
solid application to qualify.
BusinessCreditLines
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9. Litigation funding is another unique funding option for law
firms to access cash in a way that is not available to other
small businesses. Few lenders like Burford Capital and
Advanced Legal Capital lend money to law firms based on
the projected court case wins or settlements. In this
funding option, lenders offer an advance on the loan you
hope to win as part of your clients’ court cases, and repay
it based on the total you receive.
Litigation Finance
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10. Most practice law firms start with lawyers having a shiny diploma and some savings. Starting a law firm to support
and assist you over certain period is a long-distance race, not a sprint. Therefore, you should have enough savings
in your account to cover your one year of personal living, unless you have a partner who earns enough to support
your family without your help and is dedicated to do so until your practice becomes profitable.
Financing from Personal Savings
Many lawyers have taken a leap of faith and worked hard to succeed
without personal savings, but there are many as well who have failed
financially, and ended up with stress and problems, or both.
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11. Moreover, it is advisable to consult with a tax advisor before asking a loan from your
family and friends, because changing market rates can have contrary tax penalties
for both lender and borrower.
Banks and credit unions are paying low rates on personal savings making it an attractive option for law
firms to borrow money from their loved ones. If you’ve a sound business plan with successful existing
practice but is strapped for cash, loans from family and friends is an attractive option. However, borrowing
from your loved ones comes with its own potential problems. To many lenders, this funding option is filled
with the likeliness of conflicts of interest. The informal handling of transactions in this scenario often leads
to later incongruities over the terms of loan repayment. To avoid such issues, its better to draft an inclusive
agreement of loan interest rate and repayment terms and have it reviewed by the independent counsel.
07Loans from Loved
Ones

12. A local small business incubator is relatively a new option for law firms to
succeed. These are also called small business resource centers, with
inexpensive services including office spaces and amenities, audiovisual
services, as well as counseling, marketing, and future growth strategies.
A local business incubator is a better substitute to a home office
especially for lawyer with no capital in hand.
Local
Business
Incubator
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13. LawsuitFinancing
As a litigator who acts for plaintiffs, you should know that the trial cost of a personal injury or
other lawsuits could be arduous. For most startup lawyers and law firms, managing these
costs is difficult. Well, the good news is there are new lending institutions that provide
lawsuit financing, on a case-by-case basis, for clients or their lawyers. Many investors, from
private lenders to banks and hedge funds, are keenly looking for big returns on their
investment. Lawsuit financing is one of the way!
These lenders are offering pre-settlement funding with cash from $500 up to tens or even
hundreds of thousands of dollars. These loans carry high interest rates ranging from around
15% to 24 % per year—and sometimes even more. This is because of the client’s no
creditworthiness and the likelihood that the plaintiff will not succeed in the suit or recovers
less than the amount advanced.
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14. Before jumping into any kind of small business loans options for
law firm, make sure you know your needs and options. Every
loan option has its own criteria, terms, and fees. Irrespective of
what you choose, the goal is to understand all of your loan
options. With the advancement in technology, the information is
now available at the fingertips, and staying on top of the game,
forecasting your budget, forthcoming cash needs, and cash flow
management of your new legal practice is only need sensible
planning and informed decision making.
The Bottom
Line
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