Property-secured finance for accounting, law and consulting firms

Professional firms sell time and judgement, and they get paid for both later than anyone would like. A matter runs for months before it bills. A tax season fills the office with work that converts to cash in spring. A partner retires and expects to be paid out on the agreed date, whatever the debtors ledger says.

What these firms usually have is principals who own property: homes in established suburbs, an investment unit, sometimes the office suite itself. That equity can fund the moments when a firm’s cash can’t keep up with its opportunities.

What do accountants, lawyers and consultants borrow for?

Funding moment	What drives it	Typical structure	Usual exit
Partner buy-in	Associate offered equity with a fixed completion date	Second mortgage or caveat over the incoming partner’s home	Bank refinance once profit share flows
Retiring-partner payout	Partnership or shareholder agreement sets a payment date	Loan secured on remaining partners’ properties	Bank term loan or staged buy-back
Fee book or practice purchase	Retiring practitioner sells clients and staff	First or second mortgage over the buyer’s property	Fees from the acquired clients, then refinance
Lock-up bridge	Unbilled work and debtors build ahead of cash	Caveat for a short gap	Collections over the term
Buying the office suite	Landlord offers a sale or lease ends	Private first mortgage over the suite, plus top-up security	Bank commercial loan after settlement
Tax or payroll catch-up	ATO arrears, Payday Super changeover	Caveat or second mortgage	Cash flow, or refinance

For the mechanics of an ownership change, see buying out a business partner and buying a business with property security. If the transition is planned years ahead, our page on management buyouts and succession covers staged deals.

Why can’t the firm just borrow against its client list?

Because nothing in a professional firm’s balance sheet makes good loan security. Goodwill, recurring fees and a well-known name have real worth to a buyer, but no lender can register a mortgage over them. Work in progress may never be billed in full. Debtors can dispute fees.

Trust money is a firm no. The Victorian Legal Services Board describes trust money as money entrusted to a law practice in connection with legal services, and it sits in a trust account for clients. It is never a source of working capital.

So the security is real estate the principals or their entities own. If that property sits in a family trust or company, our page on company or trust-owned property explains who signs.

How it works for a professional firm

1. A 60-second enquiry. The property, what’s owing on it, the amount and the purpose. No credit check, which matters if you’re planning a bank refinance later.
2. A conversation with a credit specialist about the security, structure and how the loan will be repaid.
3. Indicative terms, then a written Letter of Offer with the pricing, fees and conditions.
4. Documents and signing. Each property owner signs, with independent legal advice where a partner or spouse is providing security.
5. Settlement. Funds go to the outgoing partner, the vendor or the firm’s account.

The pillar page on private first mortgage business loans explains first-ranking loans; the second mortgage business loans page covers borrowing behind an existing bank loan.

Who it suits

• Principals with equity in property and a defined deadline, such as a buy-in completion date or settlement on an office suite.
• Firms that are profitable but cash-tight because lock-up has spiked.
• Buyers of a fee book who want to settle with the vendor now and refinance once the acquired fees are visible in their accounts.
• Practices that want repayments paused while a new office or partner ramps up, using interest that’s prepaid or capitalised.

When this isn’t the right move

• Billing is the real problem. If debtors routinely run past 90 days, a loan will be spent and the gap will reopen. Fix the billing cycle first.
• The buy-in price doesn’t stack up. If the profit share won’t service a bank loan in a year or two, borrowing short term only defers a bad deal.
• You need a long-term facility. A firm that wants a standing limit for decades is better served by a bank once it qualifies.
• The purpose is personal. A new family car or a holiday home is not a business purpose and doesn’t fit here.

How does it compare with other funding options?

Option	What secures it	Speed	Notes
Property-secured private loan	Home, investment property or office suite	Possible within 24–48 hours once documents are in	Fits fixed deadlines; interest can be prepaid or capitalised
Bank practice loan	Usually property plus guarantees	Weeks, often longer at year end	Lower cost for firms with clean, current financials
Vendor finance from the retiring partner	The vendor’s trust in you	Negotiated	Keeps the vendor tied to the firm; see vendor finance vs a private loan
Unsecured business loan	Personal guarantee	Fast	Smaller amounts, frequent repayments
Selling a property	n/a	Months	No debt, but slow and final

How do you size a lock-up loan?

Lock-up is the time between doing the work and banking the fee. Before borrowing against it, measure it properly:

• Count both halves. Add unbilled work in progress to debtors, then compare the total with a normal month’s fees. If it has jumped well above the usual multiple, find out which matters or clients caused the spike.
• Separate timing from bad debt. A large matter that bills on completion is a timing gap. A client who has stopped answering emails is a collection problem, and borrowing won’t solve it.
• Date the cash. List what you realistically expect to collect in each of the next six months. The loan should cover the shortfall in the worst month, not the whole ledger.
• Set the term to the slowest item. If the big matter settles in five months, a six or nine-month term leaves a margin without paying for time you don’t need.

A firm that does this work usually borrows less than it first thought, and repays on time. Our page on cash flow loans while waiting for customers to pay covers the same discipline for other industries.

What it costs (without the guesswork)

Each loan is priced on the security, the LVR, the term and the exit, and the aim is the keenest pricing your circumstances support. What you’ll see itemised on the Letter of Offer: the interest, which can be prepaid or capitalised; a small assessment fee that varies by loan; and legal and registration costs. A first mortgage over a debt-free office generally costs less than a caveat or second mortgage behind a bank, because the lender ranks first.

Documents you’ll need

• ID for each borrower, director, partner and guarantor;
• the partnership, shareholder or practice sale agreement that sets out the price and completion date;
• title details for each property, and statements for any existing loans;
• recent BAS and management accounts, plus an ATO account statement if tax is being cleared;
• the trust deed or company constitution where an entity owns the security;
• a brief note from your accountant on the refinance plan, if you have one.

Business.gov.au suggests buyers of an existing business review three to five years of financial records and confirm the business’s licences are current before signing. A lender looks at the same papers, so a fee book purchase with that homework done moves faster.

How fast can a firm be funded?

Funding is possible within 24–48 hours for up to $5m once documents are in, and property-secured amounts from $20k to $250k are possible the same day. With no formal valuation required, there is no inspection to schedule. The usual hold-ups are multiple signatories: every partner offering property, and every co-owner of that property, needs to sign.

What could the numbers look like?

Illustrative example: a Melbourne senior associate is offered a partnership with a buy-in of $400k due at 1 July. She owns a home in Kew worth about $2.2m with $900k owing to a bank. Net funds work like this:

• Home value $2.2m × an illustrative 70% LVR band for a second-ranking loan = $1.54m total headroom.
• Less the bank’s $900k = $640k available behind the bank.
• She borrows $430k by second mortgage for 12 months, with interest capitalised so there are no repayments.
• Less the assessment fee and legal costs.
• About $400k is paid to the partnership at completion. Nine months later, with two partner distributions on record, her bank refinances the debt and the private loan is repaid in full.

Firms around Collins Street and the inner east can read our Melbourne private lender page. Health practices face similar buy-in questions; see medical and dental practices.

See if your firm can qualify

Start your enquiry with the property, what’s owing on it, the amount and the deadline you’re working to.

There’s no credit check to ask, your details stay with one direct lender instead of being circulated, and a specialist who has seen partner buy-ins and practice sales reads what you send. Accurate figures for the property and its existing loans are the quickest route to a reliable answer. Check what your property could fund.