WHAT YOU NEED TO KNOW TO GET A LAW FIRM LOAN
For the academic year 2019 to 2020, the average annual cost of private law school was a staggering $49,548. That’s the bare midpoint cost per year, and law school takes at least three or four years to complete. That means law students pay a minimum of $150,000 to $200,000 to get their education.Most studends have to at least consider How to Get a Law Firm Loan
These education expenses don’t end with law school, though, as there’s higher ed to think about too. Many
graduates have to take law specialization courses as well.
So, it’s no wonder that law firm loans have become the norm for startup practitioners. Without legal funding, it would be close to impossible to launch a new legal practice.
Ready to begin your legal funding application? Then be sure to read this guide first!
1. A LAW FIRM LOAN Loan Can Help Your Startup Succeed
If you’re thinking of starting your own law firm, a business loan can help you succeed. A study found that loan-backed businesses had twice the revenue. That’s in comparison with companies without any form of credit at all.
2. Traditional Lenders Want to Know What You Need the Loan For
Do you need the funds to cover monthly office expenses, such as rent, utilities, and research? Perhaps you need funding for filing fees, insurance, payroll, or other operating costs. You may even need TO GET A LAW FIRM LOAN to cover the advances and deposit for the actual office itself.
It’s crucial to make a list of all these expenses as traditional lenders will ask you what you need the loan for. For instance, many banks will want to know if the money you’ll borrow will go toward rent or equipment costs. The Small Business Administration (SBA) has even more stringent requirements.
If you don’t want to go through all these, non-recourse solo attorney case loans are your better option. These come with more relaxed lending standards, and you can use the funds for whatever you need. You can even use the cash to cover your law firm’s advertising and marketing expenses.
3. Most Lenders Would Review Your Credit Score
In the US, almost one in five young people (18 to 22 years old) don’t have a credit report. Those who do (such as those who already use credit cards) have an average credit score of 672. By Experian standards, that’s below what classifies as a “good score.”
If the same goes for you, you’re likely to have a hard time qualifying for a bank-issued business loan. Credit scores, after all, are one of the most crucial factors to be eligible for traditional loans. If you don’t have a credit score of at least 700, most business lenders will say no to your application.
This isn’t the case with law firm financing programs from legal funding lenders. They’re not like usual business loans, as they don’t require an in-depth look at your credit history. Instead, they will base your qualification on the merits of your pending cases.
4. Business Bank Lenders Also Look at Cash Flow
When reviewing applications for small law firm loans, most lenders look at cash flow too. This is a measurement of the amount of expendable cash that a borrower has. It has to be dispensable, as traditional lending firms will consider this as a way to pay back what you owe them.
These lenders often don’t grant business loans for law firms if the borrower has too little cash on hand. Unfortunately, most lawyers who want to start their own firm fit this bill. For many, a lack of cash flow is the reason they need to take out a loan in the first place.
Non-recourse legal funding for attorneys and law firms won’t require this from you. They understand that many attorneys are still paying back their law school loans. After all, as many as six in 10 student debt borrowers say they’ll be in their 40s by the time they pay off all their debts.
Instead, legal funding firms will only have to verify the success potential of your cases. If the lender sees that your claim has a strong possibility of winning, you’re likely to get the funds you need.
5. How You Get Paid Matters to Most Lenders – but not so for law firm loans
Many lenders may also be unwilling to extend credit to contingency-fee lawyers. In such cases, litigators who act for plaintiffs often don’t get paid for weeks and even months. At the very least, personal injury settlement checks can take up to six weeks to release.
Some cases, such as wrongful incarceration, can even take several years to settle.
It’s because of this payment structure that most lenders shy away from such attorneys. There are too many variables in contingency fee-based cases, all of which are too risky for banks.
As such, if your firm focuses on personal injury, consider cash funding on litigation. Lenders that specialize in legal funding make decisions based on the laws itself. It won’t matter if your cases will take months to settle; what matters if it has a high likelihood of
6. How Soon Do You Need the Funds?
The current health situation has led to numerous delays in the justice system. Many courts, including the Supreme Court, even went on a temporary closure. For guilty defendants, this is great news, but terrible for attorneys and plaintiffs.
If the backbone of the justice system itself had to close, then you can expect lenders to have been the first to do that. They continue to operate, yes, but they do so with a skeletal workforce. As a result, it can take even much longer to process business loan applications.
The thing is, most lawyers and plaintiffs cannot afford to wait for an uncertain period of time. Mortgages, rent, utilities, and basic needs won’t stop just because of the lockdown.
This is where the quick turnaround time of litigation funding firms come into play. Lawsuit Cash 911, for instance, issues non-recourse loans within 24 to 48 hours. The team will process your application right away, and if you qualify, you’ll get the funds in just one or two days.
7. How Do You Plan to Pay Back the Loan?
When comparing your law firm financing options, consider their repayment structure. As with most traditional loans, these come with monthly interest rates. With such funding programs, you’d need to repay the lender every single month.
Even a single delayed payment of these loans can already damage your credit score. If you took out a secured loan, failure to pay it back would lead to the loss of the collateral. The secured loan lender will take possession of the security as a means to recoup your unpaid loan.
This can have a devastating impact on your law firm, especially if you used essential assets. You risk losing much of what you’ve invested in your practice due to the non-payment of secured loans.
If you fail to repay a non-secured bank loan, then your entire financial future will suffer. Your credit score will drop, and you’ll have a hard time applying for other loans.
If you’d rather not risk any of your assets, then custom solo attorney loans may be better suited for you. You’d only need to pay back a non-recourse litigation funding program if you win the case. If not, the lender won’t pursue you for repayment.
8. Factor In When You Need to Repay the Lender
As mentioned above, most traditional loans require monthly payments. Specialized litigation funding, on the other hand, usually only have a one-time repayment. You’d only need to pay back the latter if and when you win the lawsuit for your client.
9. The Need for Continuous Access to Financial Resources
Since most lawsuits take months to years, it’s best to have access to continuous funding. A line of credit account custom-designed for your law firm is one of your best options. With this, you’d always have resources to tap for any ongoing expenses.
10. Law Cash 911 Only Need Three Basic Requirements
Law Cash 911 provides attorney practice loans and tailored loans for law firms. These litigation funding programs are non-recourse and act more as a cash advance than a loan. Meaning, you don’t have to worry about monthly repayments or paying back the debt at all if your case doesn’t win.
Law Cash 911 will not base your eligibility on credit history, cash flow, or outstanding debts. There are only three primary factors you’d need to qualify for legal funding.
First, the active lawsuits that you’re handling should have established merit. The defendant of these cases should also have a strong financial foothold. They should be capable of paying the settlements or have adequate insurance.
The third factor is the amount of damages that you and your client is suing for. The more significant this is, the higher the likelihood of legal funding qualification.
Raise Your Law Firm’s Chances of Success With the Best Law Firm Loans Now
As you can see, there are a lot of factors that traditional lenders of law firm loans take into account. If you don’t meet even just one of these, especially credit score, you’re unlikely to get a yes from them. Law Cash 911 won’t put you through the same hoops and stringent
loan application process.
If you need funding for your law firm as soon as possible, we are ready to help. Apply for your attorney and law firm funding loan with us, and we can get you the funds you need in as little as 24 hours.
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