FINANCING FOR ACCOUNTING AND TAX FIRMS
Due to the seasonal nature of accounting practices, many lenders view business lending to accountants as high risk. However, seasonality alone is not the determining factor in getting a loan from any source. You will need to provide a comprehensive business plan for your accounting practice, to be included in the loan package PHD Financial will submit on your behalf.
Writing a business plan for your accounting practice with financial history and projections is a large, critical part of making your case to a lender.
If you have an accounting specialty, such as payroll services for small local companies, or tax preparation for people who earn a living from sales jobs, you can demonstrate a focus and show your expertise in this area. Lenders often make subjective decisions based on a company’s perceived risk combined with a its ability to navigate its marketplace.
PHD Financial will work closely with you to make sure you are well positioned to show your practices viability.
Some kinds of financing are better suited than others when it comes to helping small business owners manage the ebbs and flows of accounting practice income.
Small Business Administration Loans (SBA Loans)
SBA loans are known across many industries as the gold standard of loans. They offer the most favorable rates and terms for borrowers seeking term loan financing facilities. If your technology investment will exceed $10,000 for your accounting practice, the SBA should be our first choice for you. The SBA can guarantee up to 85% of a loan, allowing you to borrower higher loan amounts on more favorable terms.
Given the high risk associated with business loans for accountants, the SBA Loan program has a lower approval rate for this field of practice.
When seeking an accounting practice loan, PHD Financial may likely try to place you with the SBA 7(a) loan program. This program has features that align well with the needs of the accounting professional, including its maximum loan amounts, repayment horizons, interest rate, and flexibility in the use of funds.
What to expect:
- Loan Amounts: Up to $5 million
- Repayment Term: 5 to 25 years
- Interest Rates: Starting at 6.75%
- Time for Approval: Approximately 6 weeks
Conventional Loans for Accounting & Tax Firms
Traditional banks are still the leading source of small business loans.
PHD Financial may seek some level of funding through the bank where you already have a merchant account.
Some other lenders have loan programs designed especially for accounting professionals. Once again, the high attrition rate of accounting practices makes loans for accountants a higher-risk proposition for banks. In general, they will have stricter standards for financing an accounting practice.
Bank terms are not generally as favorable as SBA-backed loans, but here is what you might expect from a bank loan:
- Loan Amounts: $30,000 to $5 million
- Repayment Term: Up to 10 years
- Interest Rates: Starting at 7%
- Time for Approval: average 4 weeks
In addition to SBA and conventional bank loans, PHD Financial works with bridge lenders and other funding sources.