Offices of Lawyers (NAICS Code: 541110) ranked #18 in our latest research on the top 40 industries for SBA financing over the last decade. During this period, the number of business loans for lawyers reached 6,168 SBA 7(a) loans totaling roughly $1.25 billion. Attorneys find the 7(a) Program to be one of the most attractive options for financing because of the flexibility surrounding the permissible uses of proceeds, such as continuing legal education, refinancing existing debt, and working capital to cover case expenses.
If you’re considering an SBA 7(a) loan for your law practice, you’re looking into one of the best small-business loan products on the market. If you’re able to qualify, you’ll find that SBA loans tend to be advantageous in comparison to alternative commercial loan products. Lower interest rates, longer repayment terms and manageable fees are some of the primary benefits. Keep in mind, the 7(a) Program was created for small businesses to grow and succeed long-term.
Competition for jobs within the industry is expected to increase according to the U.S. Bureau of Labor Statistics as more students graduate from law school each year than there are positions available. Rather than pursuing alternative careers, many graduates may look to start their own practice, which will require start-up capital that can be obtained via SBA loans.
Common Ways Lawyers Use SBA Business Loans
Regardless of experience, the challenges of running your own legal practice can be substantial and it’s critical to understand the anticipated expenses. Below are a few examples of ways SBA loan funds can be used to help fund your growth.
- Maintaining Reputation – Firms are expected to have tastefully decorated offices and knowledgeable and licensed staff members. They need to maintain various association memberships to give the impression of credibility and professionalism to their clients, all of which can be costly.
- Marketing Campaigns – Word of mouth is excellent advertising for a law firm, but more and more, firms are looking for better ways to land additional clients and attract the best recruits. Digital advertising, T.V., and radio are some of the most common forms of marketing campaigns for attorneys.
- Specific Cases – It is becoming more common for established attorneys to seek financing for complex litigation work tied to an upcoming case they expect to win. These loans can typically be secured by a future verdict or settlement.
- Business Acquisitions – Changing demographics and the retirement of professional service firm owners create an opportunity for business acquisition and expansion.
Understanding which of these needs best fit your practice can help increase the likelihood of being approved for an SBA 7(a) loan.
Loan Size: The average loan size for law firms is much lower than national average. In FY2019, the average loan size for attorneys was $270,145 versus the national average of $450,212.
Key Statistics & Trends
Utilizing the SBA 7(a) Loan Program is one of the most popular ways for law firms to access capital. Maintaining a high level of credibility and professionalism, running marketing campaigns, and being able to accept large scale litigation work will require many legal practices to seek financing. Business loans for lawyers could have a considerable impact when starting your own practice or trying to buy an existing practice.
Ready to get started with your SBA loan application? Complete the form below to check your eligibility. A banker from West Town Bank & Trust will contact you to discuss your law firm financing options.
Apply for an SBA Loan for Your Law Firm
About West Town Bank & Trust
At West Town Bank & Trust, our most important goal is to understand what’s important to you, what’s getting in your way, and what you hope to achieve, so we can help you get there. Since 1922, we’ve been creating long-lasting relationships with our customers based on old-fashioned values and future-thinking ideas. Whether solutions come from surprisingly innovative tools or trusted products you’re familiar with, our single-focused purpose is your financial well-being.