LLPs and partnerships of four or more partners can use most of the same commercial finance as limited companies, including business loans, revolving credit, tax loans, invoice finance and asset finance. Lenders focus on fee income, cash flow, debtor quality and the commitment of the members or partners, who are often asked for personal guarantees. Because these entities are not treated as individuals under consumer credit rules, their borrowing is generally unregulated.

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01

Who this guide is for

Limited liability partnerships and traditional partnerships are common in professional services: accountancy, law, architecture, surveying, engineering consultancy, medical and dental practices, and investment and advisory firms. This guide covers LLPs of any size and partnerships of four or more partners.

02

Why four or more partners matters

Under the Regulated Activities Order, a partnership of two or three partners (where not all partners are companies) is a "relevant recipient of credit", treated like an individual, so lending to it can be regulated. A partnership of four or more partners falls outside that definition, as does an LLP, which is a body corporate. Welcome Finance only arranges unregulated finance, so we work with LLPs and partnerships of four or more partners. Our guide to regulated and unregulated business finance explains the distinction in more detail.

03

Common funding needs

  • Working capital: bridging the gap between doing the work, billing it and being paid, which can be long in professional services.
  • Tax: spreading a VAT bill, or smoothing the firm's cash flow when partners draw funds to meet their own tax payments.
  • Partner changes: helping fund retirements or new partner capital contributions, subject to the partnership agreement and advice.
  • Equipment and technology: IT, specialist clinical or survey equipment and vehicles.
  • Growth: opening a new office, hiring or acquiring another practice.
04

Products that often fit

  • Revolving credit facility: a flexible limit for uneven fee income and seasonal pressures.
  • Working capital loan: a fixed sum over a set term for a specific need.
  • Tax loans: spreading a tax bill over several months so it is paid on time.
  • Invoice finance: releasing cash from billed fees owed by business clients. Work in progress and unbilled time are usually harder to fund, so check what a provider will accept.
  • Asset finance: hire purchase or leasing for equipment, keeping other facilities free.
  • Acquisition finance: funding the purchase of another practice or business.
05

What lenders look at

  • Filed accounts for LLPs, or accountant-prepared accounts for partnerships, alongside recent management figures.
  • Fee income trends, client concentration and the ageing of debtors and work in progress.
  • Bank statements showing how cash moves, including partner drawings.
  • The members agreement or partnership agreement, including how capital and profit are shared and what happens when partners leave.
  • Personal credit files of members or partners, and their willingness to give guarantees.
  • Professional indemnity cover and any regulatory issues relevant to the profession.
06

Personal guarantees and joint liability

Members of an LLP normally have limited liability, but a personal guarantee changes that for the debt it covers. In a traditional partnership, partners generally already share liability for the firm's debts. Lenders commonly ask several members or partners to guarantee, often jointly and severally, which means any one of them could be pursued for the full amount. Check how guarantees interact with the partnership or members agreement, especially when partners join or leave, and take independent legal advice.

07

Preparing an application

  1. Gather the latest accounts and current management figures.
  2. Prepare aged debtor and work in progress reports.
  3. Collect three to six months of bank statements for every business account.
  4. Have the members or partnership agreement ready.
  5. Agree internally who will sign guarantees and on what basis.
  6. Summarise how much you need, what it is for and how it will be repaid.

Borrowing may not be right if the need is really a permanent shortage of partner capital, or if the partners cannot agree who will guarantee. In those cases, revisiting capital contributions, drawings policy or billing and collection practices can do more than a loan.

08

Next step

Welcome Finance is a commercial finance broker and is not authorised or regulated by the FCA. We work with LLPs and partnerships of four or more partners, compare lenders that understand how professional practices earn and bill, and help you present your application clearly. Check your eligibility in 60 seconds; it will not affect your credit score.