Own an accounting or professional services firm and want to know the debt capacity of your business? Or looking to buy another professional services firm and want to know if you can debt fund 100% of the acquisition?

As you will no doubt be aware, all of the banks have a strong appetite to lend to accounting firms and other professional services firms. This appetite is based on a number of factors though is largely based on the level of recurring revenues that is typical with these types of firms and therefore give lenders confidence on the ability to service a business loan.

A number of the banks have a separate approval process so professional services firms can benefit from a quick and streamlined process and competitive loan terms. So what is the debt capacity of my firm?

Whilst it may vary somewhat based on the operating profile of the firm, the following summarises the typical characteristics of a bank loan to a professional services firm;

  • Maximum debt sizing at 3.5x EBITDA (adjusted for the partner's salaries);
  • Attractive interest rates with an interest only option available (3 years);
  • Minimal or simplified covenants package; and
  • Security to comprise a charge over the accounting practice and personal guarantees from directors.

Loans can be used for a variety of purposes including:

  • Acquire another accountancy practice or fee books;
  • Capital expenses;
  • Refinance existing debt;
  • Facilitate the buy in of new partners; and
  • Provide capital to fund the growth of the business.

In addition to the above, accountants can benefit from very competitive rates on other finance facilities for their personal matters including reduced rate mortgages and vehicle finance.

Want to know more? Please give us a call on 1300 001 567 for a no cost, no obligation confidential discussion to fund out what the funding alternatives are for your business.

CreditSME is a business loan specialist that arranges loans for clients on the best possible terms available. CreditSME is an authorised representative under the Australian Credit Licence 384704 and is accredited with over 50 bank and non-bank lenders.