Solicitors Business Loans — Early Repayment Options and Charges

By Sam Turner, Business Finance Specialist — Updated 29 October 2025

Summary: Yes — most solicitors finance products can be repaid early, but whether you pay and how much depends on the product type, whether the rate is fixed or variable, any hedging in place (eg interest rate swaps), notice periods, and the lender’s contractual terms. Fixed-rate term loans and some hedged facilities commonly carry early repayment charges (ERCs) or breakage costs; overdrafts and variable-rate facilities are generally more flexible. Always ask for a formal redemption figure and compare that to refinancing costs. Get a personalised estimate — Get Quote Now — Free Eligibility Check.

Disclaimer: UK Business Loans is an introducer — we do not lend or provide regulated financial advice. This page is for information only. Completing our 2‑minute enquiry helps us match your practice with lenders or brokers who can provide tailored quotes.

At a glance — Can solicitors finance be repaid early?

Short answer: usually yes, but the cost varies.

Variable-rate products (overdrafts, most lines of credit and many unsecured loans) often allow early repayment or closure with little more than an admin fee. Fixed-rate term loans and facilities built on hedged funding (eg where the lender used an interest rate swap) frequently include an early repayment charge or breakage cost that compensates the lender for expected lost interest.

Invoice finance and factoring operate differently: you can usually end a facility, but the lender will collect outstanding debtor payments and may charge notice or exit fees.

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What kinds of finance do solicitors use?

Solicitor firms commonly use several finance types, and early-repayment rules differ by product:

• Business loans (term loans) — secured or unsecured; fixed-rate loans often have ERCs, secured loans may have legal costs to discharge security.
• Overdrafts & lines of credit — generally flexible; closing may need short notice and could include an admin fee.
• Invoice finance (factoring/discounting) — closing requires settling client monies handling, notice periods, return of collected sums, and possible exit fees.
• Asset finance — hire purchase/lease agreements may include early termination/settlement figures, and sometimes balloon payments.
• Partner buyout / acquisition finance — bespoke deals may have specific clauses on early repayment or refinancing.
• Bridging finance — short-term facilities often designed for quick exits; early repayment is common once sale completes but check arrangement fees.

Because solicitor practices often hold client funds and operate on completion cycles, borrowing structures and security (eg charges over practice assets or partner guarantees) influence whether early repayment is practical or costly.

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How early repayment typically works

Early repayment can be partial or full:

• Voluntary partial prepayments — many lenders allow them, sometimes without penalty, reducing outstanding principal and future interest.
• Full redemption — paying off the whole outstanding facility; lenders provide a redemption or settlement figure that itemises principal, accrued interest and any charges.

Common mechanics:

• Give the lender required notice (often 30–60 days for loans).
• Request a formal redemption figure in writing — this should include the calculation method and validity period.
• Pay the redemption amount by the date specified to avoid additional interest.

Examples:

• Example A: A five‑year fixed-rate loan with 3 years remaining. The lender may apply an ERC of, say, 2% of the outstanding balance plus a breakage cost if the lender used a swap to fix rates. The redemption figure shows each element.
• Example B: A variable-rate overdraft repaid early — typically no ERC, maybe a small closure admin fee (£100–£500) depending on lender policy.

Always ask for the precise formula and, if hedging is involved, for a breakdown of any swap breakage calculation.

Get a lender to estimate your early repayment costs — Get Quote Now

Typical charges you may see

Common fees and what they mean:

• Early Repayment Charge (ERC) — typically a percentage of outstanding balance (e.g., 1%–5%). May be a fixed rate or a sliding scale reducing over time.
• Breakage costs — compensation for the lender’s loss if rates have been fixed via swaps; can be sizeable if market rates moved significantly.
• Exit or facility closure fee — administrative fee for processing closure (£100–£750 typical, but varies).
• Notice-period penalties — charges if you redeem without meeting the agreed notice period.
• Legal and valuation fees — if security must be released or properties revalued to discharge a charge.
• Interest recalculation — accrued interest to settlement date, potentially at a default rate if past due.

How charges are calculated: some lenders use a simple % of outstanding balance; others use present value calculations comparing contractual interest to current market rates. Your facility agreement must set out the method — if it doesn’t, ask the lender to explain in writing.

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Factors that affect whether you’ll pay charges

• Product type: fixed-rate term loans are the most likely to carry ERCs.
• Remaining term: early in the loan term usually means higher ERCs.
• Security and hedging: secured loans and hedged facilities increase potential fees.
• Market rates: large moves since the loan was made may increase breakage.
• Lender policy and competition: some lenders are more flexible or will waive charges to retain business.
• Complex guarantees or cross-collateralisation: releasing security can trigger additional costs.

Specialist lenders that understand legal practices may offer more flexible terms — it pays to shop around.

How to minimise or avoid early repayment costs

Practical steps your firm can take:

• Negotiate terms up front — ask for capped ERCs or a window for penalty-free prepayment.
• Choose the right product — if you expect to refinance or repay quickly, favour variable-rate or short-term facilities.
• Refinancing / portability — some lenders allow a new lender to step in and take over security; this can reduce breakage costs.
• Request a redemption figure early — compare it with the cost of refinancing to make an informed choice.
• Use a broker — brokers can sometimes negotiate waivers or source lenders with low/no ERC for solicitors practices.
• Partial prepayments — reduce balance without triggering full redemption charges where allowed.

Always weigh the total cost of exit (ERC + fees + legal costs) against future savings from lower rates or better terms.

Talk to a specialist broker or lender — Free Eligibility Check

What to ask your lender before you sign — a quick checklist

• “Is there an early repayment charge or breakage cost? Please provide the formula.”
• “What notice period is required to redeem the facility?”
• “How and when will you provide a formal redemption figure and how long is it valid?”
• “Are there admin, legal or valuation fees on facility closure?”
• “If I partially prepay, how does that affect the schedule and fees?”
• “Can fees be negotiated or capped in a refinancing scenario?”

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Example: common real-world scenarios for solicitors firms

Scenario 1 — a small high-street firm: an overdraft was used for everyday cashflow. When a large file completes the firm repays the overdraft in full. Outcome: usually straightforward closure with a small admin fee; no ERC.

Scenario 2 — firm using invoice finance: the firm decides to stop factoring. The provider will require notice (often 30–90 days), collect outstanding ledger balances and may charge an exit fee. Outcome: ensure the lender’s client money process and transfer of debtor handling is clear to avoid compliance issues.

Scenario 3 — partner buyout refinance: a five‑year fixed-rate loan taken for a partner buyout is replaced after two years by a new lender offering better terms. Outcome: the original lender applies an ERC and possibly breakage costs; the new lender may pay these in some arrangements, but compare net benefit before proceeding.

What to do next in each case: request a redemption figure, obtain refinancing quotes, and compare net cost vs future savings.

How UK Business Loans helps

We connect solicitor firms with lenders and brokers who understand the sector and typical refinancing/exit issues. Complete a short enquiry and we’ll match your practice with partners who can provide tailored quotes and likely early‑repayment estimates for loans from £10,000 upwards.

Free Eligibility Check — Get Quote Now

For more background on the market and products designed for legal practices, see our industry page on solicitors business loans.

Frequently asked questions

Q: Can I repay a solicitors practice loan early without cost?
A: Sometimes — variable-rate products are often penalty-free. Fixed-rate loans usually have ERCs or breakage costs. Always get a written redemption figure.

Q: How is an early repayment charge calculated?
A: ERCs can be a flat % of outstanding balance or a sliding scale. Breakage costs are usually calculated to compensate the lender for lost interest based on market movements and any hedging the lender put in place.

Q: Do invoice finance facilities have early repayment charges?
A: Closing an invoice finance facility typically requires notice, reconciliation of outstanding invoices, and may include exit fees. The mechanics differ from loans.

Q: Can I refinance to avoid an ERC?
A: Sometimes refinancing can reduce the net cost if the new lender contributes to exit costs or the new rate delivers savings that outweigh ERCs. Compare full costs before committing.

Q: Will asking for a redemption figure affect my credit score?
A: No — a redemption figure request is an administrative action and should not affect your credit record.

Q: Is UK Business Loans a lender or financial adviser?
A: No — we are an introducer. We match your enquiry with lenders and brokers who will contact you with options.

Next steps — Get a personalised early repayment estimate

1. Complete our 2‑minute enquiry form: Get Quote Now — Free Eligibility Check.
2. We match you with appropriate lenders/brokers for solicitors practices.
3. Receive quotes and formal redemption figures where applicable — compare and decide.

Small note: we are an introducer — not a lender. Providers you are matched with will make any formal offers and carry out their own checks.

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Sources & further reading

• SRA client money guidance
• FCA financial promotions guidance

1. Can I repay a solicitors business loan early without penalty?
Usually yes for variable-rate products (eg overdrafts/lines) but fixed-rate loans and hedged facilities often incur an ERC or breakage cost, so always request a written redemption figure first.

2. What is an Early Repayment Charge (ERC) and how is it calculated?
An ERC is typically a percentage of the outstanding balance or a sliding scale (or a breakage calculation where swaps are used) and the exact formula should be set out in your facility agreement or provided in writing by the lender.

3. How do I get a formal redemption or settlement figure for my loan?
Ask your lender in writing for a redemption figure — they must itemise principal, accrued interest and any fees and give a validity period for the quote, and UK Business Loans can match you with lenders who will provide this.

4. Will submitting an enquiry on UK Business Loans affect my credit score?
No — completing our free enquiry is an administrative match-making step and does not impact your credit file, although lenders may carry out checks later if you progress.

5. Can I refinance a solicitors practice loan to reduce costs or avoid ERCs?
Sometimes — refinancing can be beneficial if the new lender covers exit costs or future savings outweigh ERCs, but you should compare the net cost of exit plus legal fees against projected savings.

6. How do invoice finance and factoring work when I want to close the facility?
Closing invoice finance usually requires a notice period, reconciliation and collection of outstanding debtor monies plus potential exit or transfer fees and careful handling of client/debtor transfers.

7. What types of business finance for solicitors can UK Business Loans connect me with?
We connect firms to lenders and brokers for business loans, overdrafts, invoice finance (factoring/discounting), asset and equipment finance, bridging and partner‑buyout finance among other UK business loan options.

8. How quickly will I be matched with lenders or brokers after I submit my enquiry?
Typically you’ll be matched and receive a response within hours — sometimes sooner — and the service is free and without obligation.

9. Can start‑ups or firms with imperfect credit get solicitors business loans through your network?
Yes — we work with FCA‑regulated brokers and lenders who specialise in start‑ups and businesses with weaker credit histories, though eligibility and terms vary by provider.

10. What practical steps can my firm take to minimise early repayment costs?
Negotiate ERC caps or penalty‑free windows up front, favour flexible or short‑term products if you expect to refinance, request redemption figures early, consider portability/refinance and use a specialist broker to negotiate better exit terms.