Finding Finance For Your Practice



Finding Finance For Your Practice

Any professional practice – whether in medicine, the law, architecture or accountancy – also operates as a business. Indeed, the more effectively the practice is run as a business, the more likely it is able to offer the first-class service it aims to deliver its clients.

In order to deliver those professional services, any practice is also likely to find occasions when it needs to:

  • purchase or lease new equipment, which is essential to meeting the expectations of an increasingly demanding client base;
  • commission new or enhanced IT hardware and/or software systems, capable of handling the volume of data typically stored and processed by any professional practice needing to respond quickly and appropriately to clients’ demands;
  • ensure that practising partners have the necessary professional indemnity insurance cover which is typically a condition of membership of the relevant professional body;
  • have access to sufficient working capital to ensure the smooth management of the cashflow of the business.

Unsecured practice loans

Whilst these are activities essential to practically any other type of business, they are also likely to require access to additional finance over and above the working capital and retained profits already held by the company or partnership.

In short, there are many occasions on which any business may need to borrow.

The capacity for any business to borrow is determined by the amount of the loan, the period over which it is to be repaid, and the creditworthiness of the enterprise concerned.

Thanks to your status, standing and reputation as a professional practice, moreover, your particular enterprise may be better placed than many others when it comes to any lender’s judgment as to your creditworthiness.

Thanks to this head start when it comes to your search for borrowing, therefore, a loan might not need to be secured against business assets – or the personal assets of its partners or directors – which other, less creditworthy, borrowers may need in order to give confidence to the lender.

Unsecured practice loans free your business from the risks associated with securing a loan against assets which may be repossessed by the lender in the event of any default in the repayment terms.

Fixed rate unsecured loans

Unsecured loans are typically offered at a fixed rate of interest – throughout the term of the loan, therefore, monthly repayments remain at the same amount and are free from the variable rates of interest that are frequently attached to many secured loans.

This makes cashflow management considerably more straight forward and potentially much less onerous than the longer-term and variable commitment of many secured loans.

Short-term unsecured loans

Unlike secured loans, unsecured borrowing is typically for a much shorter period of time – generally between six months and five years, compared to the ten or fifteen years often associated with a secured business loan.

Not only does this make for a less onerous commitment on the part of the business, but the shorter repayment term also means less time for interest payments to accrue – which over the lifetime of a secured loan may be very substantial.

Unsecured loans for managing your tax liabilities

The short-term nature of an unsecured loan may make it the ideal tool for managing the various tax and VAT liabilities of your professional practice. Payment of these liabilities is frequently a source of some difficulty in maintaining the smooth cashflow of any business and an unsecured loan offers an opportunity to spread such payments throughout the whole year.

Indeed, many professional practices find that the use of an unsecured loan to manage tax liabilities proves to be such a useful tool that one loan is simply rolled over into a further, new short-term loan each year, as a way of permanently managing those liabilities.

Speedy unsecured loans

Whereas any secured loan is likely to take some time to arrange – if only for the necessary legal work required to draft the documents relating to the security offered – unsecured loans are typically far easier and quicker to arrange.

Many lenders are able to provide a quote – taking into account the amount you want to borrow, the repayment term and the use to which the funds are likely to be put – within an hour or so (during normal business hours).

After completion of the necessary credit checks – which are likely to take account of the professional standing and status of your business – a formal decision on any application for the business loan is then normally forthcoming within a matter of days. The requested funds may then be transferred directly to your practice bank account without any further delay.

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