Running a financially sound and successful practice – whether you are a doctor, a lawyer, architect, accountant, or any other professional – is challenging.
That challenge may be made all the more acute for some professionals as Britain moves towards its new post-Brexit identity. Some of the potential difficulties are described in an article that appeared in the Royal Institute of British Architect’s (RIBA) Journal on the 9th of May 2017 – but some of those same issues, such as access to suitably qualified staff, are likely to be shared by most professions.
Practice finance
Whatever the final deal on Brexit, however, all professional practices share a common concern in maintaining a robust financial standing that is capable of meeting the challenges of its particular market and the ability to seize new opportunities in a constantly changing world.
The largest part of your practice income, of course, comes from the fees and commissions you charge your clients. Capital on the other hand is likely to come from equity partners and other investors.
Borrowing
Capital may also be raised by way of loans and borrowing. Classically, the principal source of borrowing is likely to have been your local high street bank, through which you may have obtained a relatively long-term loan secured against assets of the practice or your own personal assets.
In today’s economic environment, however, the traditional bank loan such as this may be fraught with major drawbacks:
- first of all, banks are considerably less enthusiastic in arranging business loans – even to professional practices such as your own;
- it typically takes some time to set up such a bank loan – which is a problem if your practice is in need of the capital injection more urgently;
- because it is a secured loan, your practice or your own assets may be at risk if there is any default in making repayments; and
- a long-term loan imposes an equally long-term financial commitment on your practice – with a total amount of interest payable reflecting the term of the loan.
The answer to your more immediate problems, and a way to securing the funding you need as and when you need it, may lie in an unsecured, shorter-term loan.
Unsecured fixed rate practice loans
If you choose an unsecured loan arranged through us here at Professions Loans, you are assured of a fixed rate of interest throughout the term of the loan, with equal monthly repayments until the balance is repaid.
The fixed rate and equal monthly instalments means that you may budget for the necessary outgoings with simplicity and ease – so helping to manage that all-important cashflow.
You may choose the period over which you want to borrow the loan – as short as three months or as long as up to five years – but with this shorter payback period than for a secured loan, you may end up paying less in total interest charges. The shorter term also gives your practice the reassurance that the outstanding debt is repaid in the relatively near future and is not an ongoing commitment.
Why you might want an unsecured fixed rate practice loan
How you apply the loan we arrange is entirely a matter for your own financial targets and objectives. Some of the possibilities might include:
- aged debt – if you are running barristers’ chambers, late payments are almost inevitably one of your major headaches, and an unsecured fixed rate loan may provide just the solution to this particular problem;
- tax and VAT funding – a relatively short-term loan may also prove an effective way of meeting your tax and VAT liabilities, and by spreading the cost annually, considerably helping the cashflow of your practice;
- professional indemnity insurance – professional indemnity insurance is an essential condition to practice in many professions but may prove an immediate financial burden which an unsecured fixed rate loan may easily address;
- asset funding and leasing – any practice aiming to keep abreast of the times and the competition is going to need to acquire new assets, or lease them, from time to time, and an unsecured loan may serve as the ideal way for achieving those ends;
- IT – a particular example of the type of short-term asset that no professional practice these days may afford to overlook is information technology hardware and software, the acquisition and updating of which might be met from your professional loan;
- acquisitions and takeovers – the lack of immediately available capital may be a very frustrating way to miss any opportunity to acquire a rival firm, so a professional loan may help you realise precisely that opportunity.
This is the type of business funding which may be applied to any number of demands from an ambitious and successful professional practice.
Recent Comments