Ways to loosen the banks' tightening purse strings
Historically, banks have often lent to law firms on the basis of their brand credibility. However, growth is much more moderate in the current climate, particularly in the mid-market arena, and turning a profit is now more challenging than ever before. Law firms are facing a highly competitive market and increasingly cost-conscious clients. Banks are recognising this and are starting to change their approach to lending, bringing it more in line with other sectors. When lending to law firms, banks are increasingly undertaking more thorough and structured due diligence, either in-house or through external advisers. Boards need to consider their strategy well in advance of when banking facilities are due for renewal, or when they are seeking to increase their borrowings. This includes preparing robust financial information, including cashflows.
As banks become less eager to lend to law firms, it pays to have a strategy in place for when banking facilities come up for renewal
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