Industry · Law firms
Law Firm Business Loans: Case Costs, Payroll, Expansion and Partner Buy-Ins
Law firms are profitable and cash-poor at the same time: contingency cases consume expert and filing costs for a year or more before a settlement, hourly clients pay in 60 to 90 days, and partner draws, payroll and rent are due monthly. Banks like law firms but move slowly; online lenders move fast but need the file explained. This guide covers what firms borrow for, which products fit a receivables-heavy practice in October 2026, what the money costs with Prime at 7.00%, and what underwriters look for in a firm’s statements.
Can a Law Firm Get a Business Loan?
Yes, and usually on better terms than most small businesses, because firm revenue is steady and owners tend to have strong personal credit. A firm with two years of returns and 680+ credit qualifies for a bank line of credit at Prime plus 1 to 3 (8% to 10%) or an SBA 7(a) loan to $5 million for expansion or a partner buy-in; firms younger than two years, or with uneven contingency revenue, qualify for online lines and term loans from 600 credit and $20,000 a month in deposits, and for revenue-based financing from 500. Typical uses are case costs on contingency matters ($25,000 to $250,000), payroll and rent during slow collection months, office build-outs and technology ($50,000 to $500,000), and buying out a retiring partner. Contingency firms should also ask about litigation-funding lines, which advance case costs against expected settlements.
What Law Firms Borrow For
The pattern is long receivables against fixed monthly obligations, with large one-time needs at expansion points.
| Need | Typical amount | Best-fit product | Why |
|---|---|---|---|
| Case costs on contingency matters | $25K – $250K | Line of credit or litigation-cost line | Draw per case; repay at settlement |
| Payroll and rent in slow collection months | $20K – $100K | Bank or online line of credit | Interest only on what is drawn |
| Office build-out, technology, practice management software | $50K – $500K | Term loan or equipment financing | Fixed payment matched to a multi-year asset |
| Partner buy-in or buying a practice | $100K – $5M | SBA 7(a) | Up to 10 years for goodwill; lowest long-term cost |
| Marketing push for a new practice area | $25K – $150K | Term loan | Spread the cost over the time the cases take to pay |
Business Funding Products That Fit Law Firms
Firms with clean books and two years of history should price a bank or SBA option first; younger firms and firms with lumpy contingency income lean on online lines and term loans.
| Product | Amounts | Cost at Prime 7.00% | Minimums | Funds in |
|---|---|---|---|---|
| Business line of credit | $10K – $250K online; more secured | 1.5% – 3% per draw (online); Prime + 1 to 4 bank | 6 mo, 600+, $20K/mo | 1 – 3 days |
| Term loan | $20K – $500K | 10% – 36% APR online; 7% – 11% bank | 12 mo, 600+, $20K/mo | 2 – 5 days |
| Revenue-based financing | $10K – $1M | Factor 1.15 – 1.45 | 6 mo, 500+, $20K/mo | 24 – 48 h |
| Equipment financing | $10K – $5M | 9.9% – 24% (6% – 12% bank) | 6 – 12 mo, 550 – 600+ | 2 – 7 days |
| Invoice factoring / A/R line | $20K – $5M | 1% – 4% per 30 days | B2B invoices, creditworthy customers | 3 – 7 days |
| SBA 7(a) | $50K – $5M | 10.00% – 13.50% | 2 yrs, 680+, no open advances | 30 – 60 days |
Current ranges by product and lender are in business loan interest rates; what each product requires is in business loan requirements.
How Lenders Read Law Firm Files
- Trust accounts are not revenue. Lenders exclude IOLTA deposits; keep operating and trust accounts clearly separate so operating deposits are easy to read.
- Receivables and WIP count. Banks and A/R lenders will lend against billed receivables and sometimes work in progress; bring an aging report.
- Contingency revenue needs a story. A $400,000 settlement month followed by three quiet months looks like volatility; a case pipeline summary turns it into predictable income.
- Owner credit carries the file. Partners with 700+ credit unlock bank pricing; a partner with a tax lien or recent default can sink a bank file even if the firm is strong.
- Malpractice and licensing in good standing are standard checks; have certificates ready.
Share of applicants fully approved, by product (Federal Reserve, 2026)
81% of applicants were approved for at least part of the request. Source: Federal Reserve Banks, 2026 Report on Employer Firms.
What $100,000 Costs Law Firms
| Option | Pricing | Term | Payment | Total cost |
|---|---|---|---|---|
| Bank term loan | 9% | 5 years | $2,076/month | $24,550 |
| SBA 7(a) | 11.5% | 10 years | $1,406/month | $68,700 |
| Online term loan | 22% APR | 2 years | $5,187/month | $24,500 |
| Online line of credit | 2% per draw, two $50K draws | 6 months | Weekly | $2,000 |
| Revenue-based financing | Factor 1.25 | 9 months | ~$660/business day | $25,000 |
Total cost of $100,000, by option
Illustrative at October 2026 pricing. Compare total payback against the margin the money produces, not the rate alone.
Model your own numbers in the payment calculator and the qualification estimator.
How RAN Funding Places Law Firm Deals
Law firm files are placed with lenders that understand trust accounting and long receivables. One application and your operating-account statements go to the best-matched funders, including bank and SBA options when the firm qualifies, and you see the approvals side by side.
- Apply once with a soft pull and the last three months of business bank statements (four in NY, CA or VA).
- A specialist reads the file the same day and presents it to the best-matched funders in our network for the best deal.
- You see the approvals side by side with total payback, payment and term, and decide.
- Funding in 24 hours to 5 days on most products; SBA in 30 to 60 days.
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Common Questions
Do lenders count trust account balances?
No. Trust (IOLTA) funds belong to clients and are excluded. Lenders size the loan on operating-account deposits, so keep the accounts separate and route fees through the operating account promptly after they are earned.
Can a solo practitioner get a business loan?
Yes. Solo firms qualify on the same deposit and credit rules; a business bank account with six months of deposits and a Schedule C or 1120-S return cover most lenders.
What is a litigation funding line?
A line of credit that advances case costs (experts, filing, discovery) on contingency matters and is repaid from settlements. Specialized lenders offer it from about $50,000; a general business line can serve the same purpose for smaller case loads.
How long does an SBA loan take for a partner buy-in?
30 to 60 days with a complete package: three years of firm returns, the buy-sell agreement, a valuation and personal financials of the buying partner.
Is RAN Funding a lender?
No. RAN Funding is a business financing broker. We present your application to the funders in our network that fit your profile and show you the approvals that come back; the funding partner sets the approval, amount, rate, fees and terms. RAN Funding is paid by the lender, not by you.
Sources
- 2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey — Federal Reserve Banks
- H.15 Selected Interest Rates (bank prime loan rate 7.00%) — Board of Governors of the Federal Reserve System
See What You Qualify For
One application, about five minutes, soft pull only. A funding specialist tells you up front which products fit your file, what they cost and how fast each one funds.
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