Loans and financing throughout your career
Whether you are just starting out on your career or a partner in a firm looking to grow your businesses, it is likely that at some point you will need to take out a loan to help you achieve your ambitions.
The reasons could range from a loan to pay a tax bill through to financing to help you set up or buy a practice. Here we explain some of the potential borrowing needs and the solutions you might face throughout your career.
You might need to take out a personal loan at any time throughout your career and they can be used for a variety of reasons, such as buying a new car or making improvements to your home.
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Some lenders will offer either fixed or variable interest rates, depending on what best suits you, while some will allow you to repay your loan early without any additional charges.
Setting up a practice or buying into a partnership
Once you’re qualified and working as a lawyer, after a few years of establishing your career you may want to start your own practice or buy into the one you currently work in.
It is unlikely that you will have the finances readily available yourself to make the deal, so talk to a specialist lender with expertise of the legal profession who will be able to help guide you through the process.
Borrowing to help your practice’s cash flow and capital expenditure
Once you’re in business, you will need to ensure your firm can operate effectively and continue to grow. To assist this, you may need short- or long-term commercial loans to keep a smooth cash flow and provide necessary funds to cover expenditure in areas such as tax payments, insurance premiums and office improvements.
Every law firm needs Professional Indemnity Insurance (PII) to operate, but it is often one of the largest expenditures a practice makes each year, which means it may be necessary to take out a short-term loan in order to cover the cost.
You may need to consider short term financing to pay for tax bills throughout the year. This can include Personal Tax, Corporation Tax, Capital Gains Tax and quarterly VAT.
By taking out a loan, it means you can spread the cost of the tax bills throughout the year with manageable monthly payments. Some banks will also arrange payment of your finance directly to HMRC and, with VAT, arrange finance at short notice
Practice refurbishment and development
New heightened levels of customer service, increased competition or even new legislation means it is often necessary to invest in major renovations or revamping of practices.
These don’t come cheap and the practice may need to take out a commercial loan to help finance the improvements.
Some finance providers, such as Wesleyan Bank, offer a ‘Fast Track’ service for practices that allow firms of up to six partners to borrow up to £30,000 per partner for terms of up to 12 months for PII Premium funding, Tax and general cash flow. Capital Expenditure loans are also available for terms up to five years. This is ideal for a business that perhaps needs finance quickly due to unforeseen circumstances.
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.
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 0800 980 9351.
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