Syscap, the leading independent finance provider, is to launch a new £40m funding line for smaller law firms including sole practitioners.
The new initiative is to be launched after a UK bank agreed to provide financing for the scheme through Syscap.
The scheme will bring much needed debt funding to law firms that have three partners or less, an area of the market that has been shunned by many lenders.
Explains Philip White, CEO of Syscap: “Over the last three years it has been the smaller law firms that have suffered the most from cuts in bank lending so it is great news to see some bank funding targeting the small end of the market.”
“Far too many perfectly viable small law firms have been forced to the wall because they couldn’t get finance.”
“Sometimes this is simply because they have been caught out by the trend for customers to slow payments to their lawyers as part of their overall strategy to improve their own cashflow.”
Syscap explains that the lack of competition amongst the banks to fund smaller law firms has meant that even where lending has been available to law firms with less than three partners it has often been at unacceptably high margins.
Philip White says that the fall in conveyancing work, reduction in legal aid budgets and approaching liberalisation of the sector under “Tesco Law” has led to some banks unfairly “stigmatising” smaller high street law firms.
Syscap says that demand for funding for law firms has continued to rise since the end of the recession. For example, Syscap has seen demand for finance to pay VAT bills more than double over the last year to 388 law firms in the last 12 months (to end of March 2011) up from 117 in the previous year.
Syscap explains that the new deal to provide funding to smaller law firms was signed after Syscap and the bank had undertaken a lengthy trial to test lending to those smaller law firms.
Syscap says the credit performance of the trial came in far higher than expected.
Adds Philip White: “The smaller end of the sector is not as risky as many suggest, you just need to undertake careful due diligence.”
About Syscap Ltd
As one of the UK’s leading independent finance providers, Syscap provides tailored finance solutions and advice to help professional services organisations acquire the funding they need, when they need it.
Founded in 1990, Syscap has annual revenues in excess of £125 million and £250 million of assets under management.
Business Services Manager
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Nick Mattison or Catherine Sirikanda
Mattison Public Relations
Tel: 020 7645 3636
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