Small Business Loans for Law Firm in 2019

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SMALL BUSINESS LOANS FOR LAW FIRM IN 2019
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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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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, youre 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.
LAW FIRM FINANCING
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LAW FIRM FINANCING
The law firm financing options are from
traditional loans to term loans, or alternative
financing that dont 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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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 youre in need of quick money,
and cant wait for that longer period to get
approval, its best to consider other funding
opportunities.
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 loans total, allowing lenders to
approve your loan application quickly. Most
traditional lenders consider lending to small
businesses a risky investmenttheyre comfortable
in working with businesses with a good and
longstanding credit history.
SBA Loans
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SBA Loan Group is another lender that provides
specific loans to law firms, with terms up to 25
years.
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Bank Loans
If you cant 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, youre 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 youll
likely get quicker decision, being it the great
option when you need cash fast.
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TERM LOANS
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
cashsometimes 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 youre 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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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 dont hit hard with
higher interest payments on the money you dont
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.
A business line of credit provides quick periodic
access to cashbeing 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.
Business Credit Lines
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Litigation Finance
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.
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Financing from Personal Savings
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.
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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Loans from Loved Ones
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 youve 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.
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.
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Local Business Incubator
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.
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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 yearand sometimes even more. This is
because of the clients no creditworthiness and
the likelihood that the plaintiff will not
succeed in the suit or recovers less than the
amount advanced.
Lawsuit Financing
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The Bottom Line
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.
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