Financing for professional services
Firms grow through hiring, acquisitions and partner transitions, often with few hard assets.
Key points
- Professional firms grow through people, so they have few hard assets.
- Lenders focus on cash flow, client contracts and work in progress.
- Partner buy-ins and succession are some of the most common reasons to borrow.
- Lines of credit help with the gap between doing the work and getting paid.
How financing works in professional services
Accounting, law, engineering, consulting and other professional firms are built on people and relationships, not equipment. That makes some lenders cautious, because there’s less to secure a loan against.
The right partner looks at what these firms do have: steady client billings, long relationships and predictable cash flow. Financing is most often used for growth, office fit-outs, and partner buy-ins and succession.
Common financing needs
Here’s how businesses in this industry typically match their needs to the right kind of financing.
| What you need | Usually the best fit | Why |
|---|---|---|
| Buy into a partnership or fund a buyout | Business acquisition | Finance a partner buy-in or succession based on the firm’s earnings |
| Bridge the gap between work and payment | Lines of credit | Cover payroll while work in progress and receivables are collected |
| Open or renovate an office | Term loans | A lump sum for fit-outs and growth |
| Get paid faster by large clients | Invoice factoring | Advance on invoices to government and corporate clients |
How NorthMerit can help
Apply once and we’ll connect you with one financing partner who works with businesses like yours. It’s free, and there’s no obligation.
What lenders look at
Lenders look at your billings history, client concentration, realisation rates and how quickly receivables are collected. For buy-ins, they want to see that the firm’s earnings can comfortably carry the new debt.
Personal guarantees from partners are common, since the firm’s value sits largely in its people.
Other things partners commonly ask about: partner buyouts and succession; work in progress and receivables; few hard assets to secure.
A partner buy-in
An associate buys a 25% stake in an accounting firm for $400,000, financed mostly against the firm’s steady earnings.
How to prepare
Have the firm’s financial statements, a billings and work-in-progress report, the partnership agreement and, for a buy-in, the terms of the purchase ready.
Common questions
Is NorthMerit a lender?
Does it cost anything to apply?
Who will contact me?
Other industries
The right financing, from the right partner.
Apply once. One financing partner who knows businesses like yours. Free, with no obligation.
