Solicitors’ Business Loans — Typical Interest Rates & Pricing Considerations

Summary: Solicitors and law firms have specific funding needs — bridging client settlements, financing practice purchases, buying equipment, or smoothing cashflow. Typical pricing varies by product and lender: bank term loans often sit between 3%–8% p.a., specialist lenders 8%–20%+, invoice finance costs are commonly 0.5%–3% of invoice value per month, and bridging loans charge 0.5%–1.75% per month. Fees, security, client-money rules and professional indemnity cover strongly influence pricing. For a quick, no-obligation assessment and tailored quotes from lenders/brokers who understand law firms, start a Free Eligibility Check now: Get a Free Eligibility Check.

At-a-glance — Typical rates and what they mean

These ranges are indicative of UK market pricing and will vary depending on lender type, firm size, security offered and the nature of the matter being financed. Always request a worked example showing total cost (APR or total payable) and fees.

Indicative ranges only

Product	Typical headline rate / range	Typical fees	Best-for
Bank term loan	3% – 8% p.a.	Arrangement 0.5%–2%; legal/valuation	Practice acquisitions, medium-term investment
Specialist / alternative term loan	8% – 20%+ p.a.	Higher arrangement & legal fees; exit charges	Higher-risk or smaller firms
Invoice finance (factoring / discounting)	0.5% – 3% per month (6%–36% annualised)	Service fee, collection fees, reserve/holdback	Firms with steady billed work and receivables
Asset / equipment finance	3% – 12% p.a.	Administration, documentation fees	IT, furniture, vehicles
Overdraft / revolving	Bank rate + 1%–4% (unarranged fees higher)	Commitment, arrangement, utilisation fees	Flexible short-term working capital
Bridging / short-term settlement finance	0.5% – 1.75% per month (6%–21% p.a.)	Arrangement & exit fees; valuation costs	Bridge property settlements or urgent gaps
Merchant cash / revenue-based advance	Variable; effective APR often very high	Factor fee, fixed origination	Fast access but costly — use cautiously

Note: These are illustrative ranges — get personalised quotes for your firm.

Why solicitors need business finance

Law firms face timing mismatches between client settlements, disbursements and payroll. Common reasons for borrowing include:

• Bridging cashflow while awaiting large client settlements or completion of matters
• Practice or partner acquisition finance and vendor bridges
• Refurbishment, IT upgrades or buying practice assets
• Invoice finance to release cash tied up in billed fees
• Refinancing existing debt to improve monthly cashflow

Need an initial, no-obligation eligibility check? Get a Free Eligibility Check.

Types of finance for solicitors

Term loans (bank & specialist)

Fixed-term capital repaid over months or years. High-street banks typically offer the lowest headline rates (3%–8% p.a.) to well-established, profitable practices with strong accounts and security. Specialist lenders price higher (8%–20%+) where risk or limited security exists. Expect arrangement fees (0.5%–2%), legal costs and possible early repayment charges. Best for practice purchases, longer-term growth and debt consolidation.

Overdrafts & revolving credit

Flexible short-term liquidity: typically priced at bank base rate (or SONIA-linked) plus a margin of 1%–4%. Fees can include commitment fees and utilisation charges. Unarranged overdrafts attract punitive fees. Good for smoothing day-to-day cashflow but not cost-effective for sustained borrowing.

Invoice finance (factoring & discounting)

Advance against invoices or billed fees. Discount rates commonly 0.5%–3% per month (effective annualised cost depends on turnover and advance rates). Additional service and collection fees and potential holdbacks/reserves apply. Solicitors have special considerations around client monies and retainer arrangements; use lenders experienced with law firms.

Asset & equipment finance

Hire purchase or leasing for IT, office fit-outs or vehicles. Rates typically 3%–12% p.a. depending on term and asset. Useful to preserve cash while spreading cost over asset life.

Bridging loans & short-term settlement finance

Short-term loans to bridge transactions or urgent liabilities. Monthly rates often 0.5%–1.75% (equivalent to ~6%–21% p.a.). Add arrangement and exit fees. Fast to arrange but pricier than term finance.

Practice acquisition finance / partner buyouts

Structured facilities — sometimes vendor finance or earn-out structures. Pricing varies; lenders focus strongly on profitability, partner covenants and P&L. Specialist brokers can structure tailored deals.

Merchant cash advance / revenue-based finance

Advance in return for a percentage of future receipts. Quick, but often very expensive when expressed as APR. Suitable only for urgent, short-term needs where cost is acceptable.

Key pricing components to check

Compare offers on an apples-to-apples basis — ask lenders for worked examples and total payable figures.

• Headline interest vs APR / effective cost: APR or total repayment example is the most useful comparator.
• Fixed vs variable rates: Many facilities are variable (linked to Bank Rate, SONIA or lender base) — ask how rate moves affect repayments.
• Arrangement / establishment fees: Often % of facility; can be deducted from funds.
• Ongoing/monitoring fees: Monthly/annual facility fees increase running cost.
• Exit or early repayment charges: Important for short-term refinancing plans.
• Valuation, legal & search fees: Especially for property-secured lending.
• Invoice finance specifics: Discount rate, service fee, collection charges, reserve / holdback policy.
• Security costs: Companies House filings, debenture registration, stamp costs and professional fees.
• Non-cash costs: Personal guarantees and director covenants increase borrower risk.

Quick tip: always ask for an itemised “total cost example” for a representative loan amount and term.

Solicitor-specific lending considerations

• Client money & SRA rules: Lenders experienced with law firms will avoid taking security over client accounts; expect questions on client account controls and retainer processes.
• Professional indemnity insurance (PII): Up-to-date PII certificates and claims history are commonly required.
• Irregular cashflow: Long-running matters, deferred billing or high disbursements can limit invoice-finance suitability.
• Client concentration: Heavy reliance on one or a few clients can increase pricing or reduce available facilities.
• Confidentiality & AML: Lenders will run regulatory checks; ensure compliant AML documentation and clear client-confidentiality procedures.

How lenders assess law firms

Most lenders evaluate both general credit metrics and practice-specific factors:

• Recent management accounts, turnover and profit margins
• Aged receivables, billable rates and collection history
• Matter lifecycle and retainer structures
• Partner drawings, stability of ownership and credit histories
• Available security: property, equipment, assignment of fees

Prepare a lender pack: management accounts (latest 12–24 months), aged debtor schedule, PII certificate, bank statements and a sample retainer agreement.

Example cost scenarios (illustrative only)

Scenario A — Short bridging

£50,000 for 3 months to bridge a settlement. Indicative cost: 0.6% per month → ~£900 interest; arrangement fee £500–£1,000; possible exit fee 1%. Fast but costlier than a term loan. Illustrative only — get personalised quotes.

Scenario B — Term loan for office refit

£150,000 over 5 years. Bank example: 4.5% p.a. → monthly repayments; arrangement fee 1% (~£1,500). Specialist lender: e.g., 10% p.a. with higher fees.

Scenario C — Invoice finance

Firms with £100,000 of invoiced fees monthly: discounting at 1% per month + service fee → monthly cash cost £1,000+ and additional reserve impacts. Cost varies widely with debtor quality and advance rate.

How to get the best rates — practical checklist

• Work with brokers experienced in law-firm finance — they know which lenders accept solicitor-specific constraints.
• Tidy your documents: up-to-date management accounts, debtor ageing, PII and retainer templates.
• Compare total cost (APR + fees) across multiple lenders, not just headline rate.
• Negotiate arrangement and exit fees and request worked examples for your exact loan amount and term.
• Consider secured vs unsecured: security typically lowers rate but increases set-up cost and personal obligations.
• Reduce single-client dependency where possible or explain mitigations to lenders.

Ready to compare quotes from lenders and brokers who understand law firms? Get Quote Now — it’s a quick, no-obligation eligibility check.

Frequently asked questions

Will making an enquiry affect my firm’s credit score?

Submitting an enquiry via our short form does not affect your firm’s credit score. Lenders may run credit checks only if you proceed with an application.

How long until I get quotes?

Often within hours to one business day once you provide the basic documents and details; complex facilities take longer.

Can a lender take security over client accounts?

Lenders generally avoid charging client money. Facilities are structured to comply with client account and regulatory rules — specialist lenders will advise.

What documents will lenders request?

Typically: management accounts, aged debtor list, PII evidence, ID for directors, recent bank statements and VAT returns where applicable.

Next steps — quick free quote

If your firm needs funding of £10,000 upward, we can match you to specialist lenders and brokers who understand solicitors’ cashflow and regulatory constraints. Complete a short enquiry (takes under two minutes) and receive rapid, no-obligation quotes and free eligibility checks: Get Started — Free Eligibility Check.

We introduce firms to lenders and brokers; we do not lend and we do not provide regulated financial advice. Terms, conditions and eligibility apply. Rates shown are indicative and illustrative only.

For more sector-specific detail on funding options available to law firms see our specialist page on solicitors business loans.

1. What interest rates can solicitors expect on business loans?
Typical UK headline rates range from about 3%–8% p.a. for bank term loans, 8%–20%+ p.a. for specialist lenders, 0.5%–3% per month for invoice finance and 0.5%–1.75% per month for bridging, though exact pricing depends on security, firm size and risk.

2. Which types of finance suit law firms best?
Term loans, invoice finance, bridging loans, asset finance and overdrafts are commonly used depending on whether you need long‑term funding, to release billed fees, short settlement bridges, equipment purchase or flexible working capital.

3. How much can a solicitors firm borrow through UK Business Loans?
Borrowing ranges widely — from around £10,000 to several million — and the amount a lender will offer depends on your turnover, accounts, security and lending product.

4. How much does invoice finance cost for solicitors and law firms?
Invoice finance typically costs about 0.5%–3% of invoice value per month plus service fees and possible reserves, with overall cost driven by debtor quality and advance rates.

5. Can a lender take security over my client accounts or client money?
Reputable lenders and brokers experienced with solicitors generally avoid charging client accounts and will structure facilities to comply with SRA client‑money rules.

6. What documents will lenders request from a law firm?
Lenders usually ask for recent management accounts (12–24 months), an aged debtor schedule, PII certificate, bank statements, director ID and a sample retainer or engagement letter.

7. Will submitting an enquiry affect my firm’s credit score?
No — submitting an initial enquiry or free eligibility check does not affect your credit score; lenders may run credit checks only if you progress to a formal application.

8. How long does it take to get quotes for solicitors’ business finance?
You can often receive initial quotes or broker contact within hours to one business day once you supply basic documents, with more complex facilities taking longer.

9. How can I get the best rates for a solicitor business loan?
Improve your chances of better pricing by preparing tidy accounts and debtor data, comparing APR and total costs across lenders, negotiating arrangement/exit fees and using brokers who specialise in law‑firm finance.

10. Are the lenders and brokers UK Business Loans connects me to regulated and trustworthy?
Yes — UK Business Loans introduces you to reputable, often FCA‑regulated brokers and lenders (we do not lend or give regulated advice) to help you compare suitable funding options.