A law practice is like any other small business – you need to have space, staff, equipment, hardware, software, copiers, fax machines, supplies, and all of the typical resources of a small business.

In addition, you need to constantly acquire new clients – this requires advertising, marketing, and other outreach efforts to continually locate, entertain, and retain new clients.

Just as with any other small business, you need the financing to start and grow your law practice. However, it is not surprising that most banks and other lenders have a certain bias against making loans to attorneys; possibly, the perception is that attorneys are comfortable defaulting on their contractual obligations, and defending themselves to avoid incurring out-of-pocket attorney’s fees, while the lender must pay their attorney to collect.

In fact, the opposite is probably true: Most attorneys are schooled in the sanctity of contract, and actually take their contractual obligations more seriously than the average citizen. So, even though attorneys make good borrowers, small firms and solo practitioners have trouble finding good small business loans.

What are the advantages of a business loan, as opposed to a personal line of credit or a home equity line? First, the loan is to the law practice itself and not you personally, and although you are typically required to guarantee the loan, it appears as an obligation of the law practice. Second, interest rates tend to be lower, and typically range from Prime + 2% to Prime + 5% (The prime rate is currently around 5% per year). And, third, business loans are available in amounts which are significantly larger than similar personal lines of credit. And, finally, a home equity line results in a lien on your real property, whereas most business lines do not require real estate collateral.

How do solo practitioners and small firms find good business loans? LegalMatch, the premier provider of nationwide attorney/client services found that many of its Member Attorneys needed good business loans. So, LegalMatch set up the Financial Services division, with the goal of helping its Member Attorneys obtain financing, along with other financial products and services, with favorable rates and terms.

In turn, LegalMatch Financial Services found a lender who shares LegalMatch’s view of attorneys: Attorneys make good borrowers. That lender is Telesis Community Credit Union. Telesis, through its subsidiary Business Partners, LLC, has established a relationship with LegalMatch, under which Telesis can provide our attorneys with small business loans and other types of credit lines at favorable terms and rates.