Professional Services Finance

Professional services finance is lending to a practice rather than to a person: funding to buy a practice or buy into one, to fit out or buy premises, to replace equipment, and to carry working capital while fees sit in lockup. Lenders assess it on the practice's recurring fee income and cash flow rather than on tangible assets, which is why a balance sheet weighted to goodwill is normal in this category rather than a problem. We structure that funding for accounting, legal, medical, dental, allied health, engineering, architecture and consulting practices in Perth and across WA.

Practices bring us 5 requests, in roughly that order of frequency. This page covers all 5, and the way a credit team reads a practice differently from a business with stock and plant. Buying into an existing partnership is the most common of them and has its own page: practice buy-in finance.

The 5 things practices borrow for

• Buying a practice, or buying into one. The whole practice or a share of it, funded against the fee base rather than the furniture. Lenders fund a purchase against a buyer contribution of 20% to 50% of the price. The buy-in version, where an employee or associate is admitted to the partnership, is covered on our practice buy-in finance page.
• Premises. Buying the rooms, the floor or the building the practice works from, either inside the practice entity or in a separate structure alongside it. Commercial property lending is assessed on the property and the business behind it rather than on a payslip, and the deposit is the part that catches practices out. Our guide to buying your business premises in WA covers deposits, how commercial valuations work and the lease versus buy call.
• Fitout and equipment. Chairs, imaging, sterilisation, IT and servers, plant, vehicles and the fitout itself. Equipment finance is secured against the assets, which keeps that borrowing out of the goodwill conversation and usually prices better than an unsecured loan. See business equipment finance for how those facilities are structured.
• Working capital, including ATO tax debt. Fees are earned long before they are billed and collected, while wages, drawings and quarterly ATO bills keep their own schedule. A business overdraft sized to the lockup cycle is the usual answer, sometimes alongside invoice finance where the practice bills on completed work. Where an ATO balance has built up, our guide to business loans with tax debt explains how those files still get funded.
• Succession and partner exits. Funding a retiring principal out, or funding the remaining partners to take up that share. The assessment is a buy-in read from the other side of the table, and the security position and existing guarantees have to be rewritten at the same time. The broader mechanics sit on our acquisition finance page.

How lenders read a practice

Professional income is not read like a wage. Partner drawings, profit share, service entity arrangements and trust distributions all have to be unpicked before a credit team sees a real income figure, and a structure built for tax rarely presents that income the way credit wants to see it. Reconciling the two before lodgement is most of the work on these files.

The balance sheet leans on goodwill, and that is normal here. Most of the value in a practice sits above the tangible assets. Lenders treat recurring professional fee income far more favourably than retail or hospitality goodwill, because the earnings are more predictable and the client relationships more transferable. Where the price is mostly goodwill, our goodwill finance page covers how those deals are put together.

The fee base is the real security. How much of it recurs, how widely it is spread across clients, how long those clients have been with the practice, and how much of it belongs to one principal rather than to the practice. A firm where a handful of clients carry most of the fees reads as concentration risk no matter how good the profit looks.

Lockup and work in progress decide the working capital. Time is recorded, then billed, then collected, and the gap between those 3 steps is where a profitable practice runs short of cash. Lenders ask for the lockup position because it tells them how much of the reported profit is actually in the bank, and it is the number that sizes the overdraft.

Personal guarantees are part of the deal. Lending against fee income and goodwill rather than hard assets means lenders look to the partners behind the practice. What is negotiable is the shape of the guarantee: joint or several, capped or uncapped, and which entities and properties sit behind it. Settle that at the outset rather than at the deed stage.

Medical and dental practices

Medical, dental and allied health practices sit inside this category rather than beside it, but 3 things about them change the funding. The first is equipment. Chairs, imaging, sterilisation and theatre gear make these practices far more capital intensive than an accounting or legal firm, so equipment finance carries more of the structure and less of the price lands in the goodwill assessment.

The second is the fitout. A new surgery or consulting suite costs real money before it earns anything, so it is usually funded as a package: the fitout, the equipment and a working capital line sized to the point where the appointment book fills rather than to the day the doors open. Getting the working capital into the original approval is far easier than arranging it separately once the practice is trading.

The third is the ownership path. Associates and contractors commonly buy in over time rather than buying outright, so the funding is usually a buy-in rather than an outright acquisition, with the practice's cash flow, the partnership agreement and the buyer's own professional income assessed together. That structure is set out on our practice buy-in finance page.

Premises are the other recurring question. Many practices end up owning the rooms they work from, often in an entity separate from the practice itself, and a practice that already owns its premises can release capital from them through a sale and leaseback or a refinance. The purchase side is covered in buying your business premises in WA.

Why a commercial broker, not a bank branch

A branch can only offer one credit policy. A practice that does not fit it hears no, and the reason is rarely explained. We work out which lenders are actively writing practice lending before anything is lodged, so the file goes to a credit team with appetite for it rather than to the nearest one.

Practices do not fit the standard small business template. Goodwill above the tangible assets, income split across drawings and distributions, and profit locked up in unbilled work all read as risk in a form designed for a business with stock and plant. Presenting them properly is the difference between an approval and a decline that follows the practice around.

Bankers first, brokers second. Rockwall was founded by two former commercial bankers. We know how credit teams assess a file, so we build the case the way the person approving it will read it.

Access to more than 40 lenders. Through our Finsure accreditation we can take a practice deal to the major banks and to the non-bank and specialist lenders that fund goodwill and professional income.

Licensed and accountable. We are MFAA members and Credit Representatives (579184, 579182 and 580433) of Finsure Finance & Insurance Pty Ltd.

Where this sits in the wider toolkit

Practice lending is one lane inside commercial finance, and most files borrow from the others. Buying a practice outright follows the same path as any business purchase, covered in getting a loan to buy a business and, for larger or more structured deals, acquisition finance. Where the seller carries part of the price, read vendor finance when buying a business. Where the practice owns or wants to own its premises, start with buying your business premises in WA.

If a practice purchase, a buy-in, a premises purchase or a fitout is on the table this year, tell us the practice, the numbers and the timing. We will tell you what is fundable, how we would structure it and which lender we would take it to. Start with our free business finance check, or enquire now and we will come back to you.

Your professional services finance specialist

Ari Freund, co-founder. Ari is a former commercial banker and Credit Representative 580433, and he runs Rockwall's professional services finance work personally. He works the whole practice funding picture: the buy-in, the premises and the working capital designed together, structured around how a fee base actually collects. More on the team.

Frequently asked questions