Question – I want to start a law firm and need $60,000 for start up costs and filing fees. I have been practicing in my field for 3 years, have established client base and contacts. I have a 620 credit score, primarily due to high law school loans.
Our Response – There are two potential issues to overcome to get financing for your law firm. First of all what are you purchasing with the $60,000. If this money is going to soft costs such as filing fees, leasehold improvements, advertising, etc you will need to find collateral to back to loan as once you spend money on these items, the money is gone and the bank has no security. Second your credit score is low for today’s banking environment. 650 is a minimum score that most banks are willing to lend at so some work is required to improve it. Another thing that isn’t mentioned is how much are you putting towards the project. Banks will typically want to see the entrepreneur put in 20%. If you aren’t putting any money in, why would the bank have any faith in this being a successful venture?
There are a few solutions to funding your law firm though.