Law firms borrow through SBA 7(a) close to the national median: 1,436 loans from October 2023 to June 2026, about $431 million from 225 lenders, at a median of $150,000 and a median rate of 10.5%. Most are small, and 44.4% went through SBA Express. Practice purchases are rare, 27 loans or 1.9% against 10.4% nationally, in part because bar rules limit who may own a firm. Lenders decide on how the firm earns: hourly and flat-fee billing reads as steady, while contingency fees need years of settled cases behind them.
| Measure | Offices of Lawyers | All industries |
|---|---|---|
| SBA 7(a) loans approved | 1,436 | 162,355 |
| Median loan | $150,000 | $150,300 |
| Middle half of loans | $50,000 – $350,000 | $50,000 – $500,000 |
| Loans of $1 million or more | 5.6% | 12.9% |
| Median rate at approval | 10.5% | 10.25% |
| Middle half of rates | 9.5% – 11.75% | 9.3% – 11.25% |
| Acquisitions (change of ownership) | 27 (1.9%) | 16,849 (10.4%) |
| Median acquisition loan | $704,000 | $693,000 |
| Lenders that made these loans | 225 | 1,648 |
| SBA 504 loans (real estate, equipment) | 298 | 16,714 |
Approvals FY2024 – FY2026 to date (1 Oct 2023 – 30 Jun 2026), cancelled loans excluded. Source: SBA 7(a) and 504 FOIA loan records, as of June 30, 2026.
- SBA 7(a) loans approved
- 1,436 (Oct 2023 – Jun 2026)
- Lenders that approved one
- 225
- Median loan
- $150,000 (national $150,300)
- Median rate at approval
- 10.5% (national 10.25%)
- Through SBA Express
- 44.4% of loans
- Practice purchases
- 27 loans, median $704,000
What SBA lenders approved for law firms
Offices of lawyers (NAICS 541110) took 1,436 SBA 7(a) loans from FY2024 through June 2026, worth $430,985,300, from 225 lenders. On size, law firms are almost exactly the national borrower: the median loan was $150,000 against $150,300 for all industries, and the middle half ran from $50,000 to $350,000. The top tenth started at $606,000, and 80 loans, 5.6%, were $1 million or more.
Pricing sat a little above the national figure: a median of 10.5% against 10.25%, with the middle half from 9.5% to 11.75%. Only 13.9% of loans carried a fixed rate, and the median term was 120 months.
| Figure | Offices of lawyers | What it tells you |
|---|---|---|
| Median loan | $150,000 | Level with the national $150,300: firms borrow for working capital, technology and fit-out |
| Middle half of loans | $50,000 to $350,000 | Mostly under $350,000, where SBA's rate caps are wider |
| Loans of $1 million or more | 80 (5.6%) | A small tail; firm purchases alone had a median of $704,000 |
| Median rate at approval | 10.5% (middle half 9.5% to 11.75%) | A quarter-point over the national 10.25% |
| SBA Express | 44.4% of loans | Many firms borrow within a lender's own streamlined credit box |
| Acquisitions | 27 loans (1.9%), median $704,000 at 9.75% | Far below the national 10.4%: bar rules narrow who can buy |
| Start-ups | 6.2% of loans | Few lawyers open a firm on borrowed money; no franchises |
| SBA 504 | 298 loans, median $562,500 | About one 504 project for every five 7(a) loans: many firms buy their office |
How the fee model decides the loan
Two firms with the same revenue can look nothing alike to an underwriter. The question is how predictable next year's fees are, and that depends on how the firm bills. Lenders sort law firms roughly this way:
| How the firm earns | What the lender sees | What the lender asks for |
|---|---|---|
| Hourly billing | Revenue follows hours worked; steady if clients pay | Receivables aging by client, realization (billed against collected), work in progress |
| Flat fees | Volume practices such as estate planning, immigration or real estate closings; predictable per matter | Matters opened by month, average fee, referral sources |
| Contingency fees | Lumpy: a single settlement can make or break a year | Several years of settled cases with fee per case, current case inventory, how case costs are funded |
| Mixed practice | The steady side carries the loan; contingency is upside | Revenue split by fee type and by practice area |
Contingency practices are the hardest to underwrite because the cash that repays the loan arrives on a court's schedule. Lenders average several years and discount a year made by one large verdict.
Two points trip up otherwise good files. Money in a client trust account belongs to clients, and lenders read the operating account only. And case costs advanced out of operating cash are an unrecorded asset whose value depends on outcomes; lenders want to know how much is out and whether other borrowing funds it. See global cash flow for how lenders then fold the partners' own income and debts into the picture.
Why so many small loans, and what Express means here
SBA Express accounted for 44.4% of law-firm loans. Express loans go up to $500,000 with a 50% guaranty, and the lender approves them on its own credit process. For working capital, technology or an office fit-out, that is often the simplest route. See SBA 7(a) vs SBA Express.
Price tracks size. SBA caps variable 7(a) rates at the base rate plus 6.5% for loans of $50,000 or less, plus 6% from $50,001 to $250,000, plus 4.5% from $250,001 to $350,000 and plus 3% above $350,000. The industry's median loan of $150,000 sits in the same plus 6% band as the national median, and its median rate lands near the national figure; the larger purchase loans priced lower, at a median of 9.75%. For rates across lenders, see SBA loan rates.
Where the need is timing, such as carrying payroll until a settlement pays, a revolving line usually fits better than a ten-year term loan. See lines of credit for law firms and line of credit vs term loan.
Buying a practice: why it is rare, and how it is done
Only 27 SBA loans in the period financed a change of ownership, 1.9% of the industry's loans against 10.4% nationally. The median was $704,000 at 9.75%. In nearly every state only lawyers may own a law practice, so the buyer will generally need to be a lawyer admitted where the firm practices, and clients remain free to take their files elsewhere once they are told the practice is being sold. Goodwill transfers only as far as clients choose to stay.
SBA's change-of-ownership rules then apply in full. The buyer needs an equity injection of at least 10% of total project costs. A seller note counts toward up to half of that only if it is on full standby, with no principal or interest paid, for the life of the SBA loan; see seller notes and SBA's full-standby rule. Because nearly all of a firm's price is goodwill, an independent business valuation is required whenever the amount financed, less appraised real estate and equipment, exceeds $250,000, and the loan cannot exceed it.
The seller-transition rule matters more in law than in most industries. In a complete change of ownership the selling lawyer may not stay on as an owner, officer or employee, which rules out the long of-counsel arrangement that many practice sales rely on. The seller may consult for up to 12 months, or up to 24 months under SOP 50 10 8.1 from 1 October 2026. A buyer should plan client introductions inside that window. See SBA seller transition and financing a law firm acquisition.
The more common ownership change in a law firm is a retiring partner's share bought by the others, a partial change of ownership under SBA's rules; see financing a partner buyout. From 1 October 2026, every change of ownership also needs financial due diligence and must show debt service coverage of 1.25x on historical results.
In a law firm purchase, the lender is underwriting how many clients stay once the selling lawyer is gone.
Owning the office: SBA 504
SBA 504 financed 298 law-firm projects in the period at a median of $562,500, a large number beside the industry's 7(a) count. Firms tend to buy office condominiums and small buildings and hold them for decades. A 504 loan typically splits the cost 50% from a bank, 40% from the CDC and 10% from the borrower, and the firm must occupy at least 51% of an existing building. Partners often hold the building in a separate company and lease it to the firm, which SBA permits under its rules for eligible passive companies; see eligible passive company and SBA 7(a) vs SBA 504.
Preparing a law firm's file
SBA's standard list comes first: business tax returns for 2–3 years, a P&L and balance sheet with a year-to-date P&L through last month-end, a debt schedule with copies of any notes being refinanced, and personal tax returns and a personal financial statement for each owner of 20% or more. Every one of those owners personally guarantees the loan, which in a firm with several equity partners can mean several guarantors. A resume supports the management-experience questions on Form 1919.
Beside those, a law firm's file should answer the fee-model questions before they are asked:
- Revenue by practice area and by fee type for each of the last three years
- Receivables aging by client and work in progress, for hourly practices
- Settled cases by year with the fee on each, and the open case inventory, for contingency practices
- Case costs advanced and outstanding, and how they are funded
- The partnership or operating agreement, including any buy-sell terms
Once the documents are in, Transparent builds the full lender package, including a financing model, lender presentation, blind teaser and underwriting memo, in a day, and takes it to the lenders in its book that write SBA 7(a) and 504, 278 of them. Lenders differ widely on contingency income, so the choice of lender matters. On SBA loans the lender pays Transparent, not the borrower. See how we underwrite.
Common questions
- What interest rate do law firms pay on SBA loans?
- From October 2023 to June 2026 the median rate at approval was 10.5%, against 10.25% for all industries, with the middle half between 9.5% and 11.75%. Only 13.9% of loans were fixed-rate. Firm purchases, which were larger loans under lower SBA rate caps, priced at a median of 9.75%.
- Can a contingency-fee firm get an SBA loan?
- Yes, but lenders underwrite it on several years of settled cases, not on one strong year or on the value of open cases. They also want to know how case costs are funded.
- Can I use an SBA loan to buy a law practice?
- Yes, if you are allowed to own it, which in nearly every state means being a lawyer admitted where the firm practices. SBA's change-of-ownership rules apply: at least 10% equity, a business valuation, no earnout, and a seller who may consult but not stay on as an owner, officer or employee.
- Can an SBA loan fund a partner buyout?
- It can. A remaining partner buying a departing partner's share is a partial change of ownership, and SBA's rules for that case apply. Every owner of 20% or more after the buyout personally guarantees the loan.