Business loans for accountants and tax practices: buying fees, funding lock-up and growing a firm

Accountants spend a good part of every year preparing clients for conversations with lenders. When it’s your own practice asking for money, the experience can feel oddly unfamiliar: suddenly you are the one sending bank statements, explaining a soft quarter and waiting on a credit team.

The upside is that lenders generally like accounting firms. Recurring compliance work, a regulated profession and clients who rarely switch providers add up to income that credit teams can model with confidence. The questions they ask are specific, though, and knowing them in advance saves weeks.

What do accounting practices usually borrow for?

• Buying a block of fees or a whole practice. These are usually the biggest deals in the profession, as retiring principals sell client lists to firms that want scale.
• Partner buy-ins and buy-outs. A senior manager buying equity, or remaining partners paying out one who is leaving.
• Lock-up. Carrying unbilled time and unpaid invoices, especially from July to the end of the lodgement season.
• Fit-outs and relocation. New offices, meeting rooms, signage and IT.
• Hiring ahead of demand. Bringing on a senior accountant before the fees to pay them are fully booked.
• Insurance and compliance costs. Professional indemnity premiums arrive as one large annual bill, which insurance premium funding can spread across the year.

How do lenders look at a practice acquisition?

Accounting fee bases usually change hands at a price tied to gross recurring fees. Australian practice brokers commonly use a starting point of about one dollar of price for each dollar of recurring fees, then move it up or down by roughly 30% depending on settlement terms, location, client quality and how much work the fees take to deliver. Treat that as a market rule of thumb rather than a valuation.

Lenders approach the same deal from the other end. They ask whether the combined firm can service the loan if some clients don’t follow the purchase. Points that lift a lender’s comfort:

Lender’s question	Reason it counts
Split of compliance versus one-off advisory fees	Compliance fees recur; one-off projects may not
Client concentration	Losing one large group of entities could hurt servicing
Clawback or retention clause	Reduces the price if fees fall short, protecting the buyer and lender
Vendor handover period	A seller who introduces clients personally improves retention
Buyer’s own track record	Years in public practice and an existing fee base reassure credit teams
Location and integration plan	Will clients keep using you if the office moves?

A worked example

Illustrative only. A two-partner firm in regional Queensland agrees to buy a retiring practitioner’s fee block of $600k a year in recurring fees. The agreed price is $570k: 60% at settlement and 40% after twelve months, reduced dollar for dollar if retained fees drop below $540k.

The firm’s bank offers a loan for the settlement payment secured over one partner’s home, plus a revolving facility to cover the extra staff while the new clients are onboarded. The second payment is funded from the acquired fees themselves. Because of the clawback, the firm is never exposed to paying for clients who leave in the first year.

If you’re weighing a purchase like this, our business acquisition loans page and funding for buying a business explain the structures in more depth.

Why does a busy practice run short of cash?

Lock-up. Time spent on a set of financials or a tax return sits as work in progress until it’s billed, then as a debtor until the client pays. In a practice that bills on completion, a large share of a year’s revenue can be stuck in that pipeline at any moment, and it peaks when staff are flat out.

Growing makes it worse. Every new client adds hours worked now and cash received weeks or months later. A firm can be profitable on paper and still lean on the overdraft to make payroll in October.

The tools that help most:

• A business line of credit sized to peak lock-up, drawn as work builds and cleared as invoices are paid.
• Progress billing on larger engagements rather than one invoice at the end.
• Client fee instalment plans offered through third-party fee-funding providers, which pay the firm up front while the client pays monthly.
• A short unsecured business loan for one-off needs like a fit-out or a hire.

If lock-up is squeezing payroll right now, see what fits your practice. Sixty seconds of typing, with nothing recorded against your credit history.

Are new compliance obligations changing costs?

For many firms, yes. The Tax Agent Services (Code of Professional Conduct) Determination 2024 added a set of extra obligations for registered tax practitioners, covering matters such as correcting false or misleading statements, supervision, and checking that the people you work with are not disqualified entities. They applied to larger firms from 1 January 2025 and to firms with 100 or fewer employees from 1 July 2025.

For lending purposes the point is practical: more time spent on supervision, quality processes and documentation can lift overheads in the first year or two. If your margins dipped as a result, explain it in a sentence when you apply. Lenders respond better to a known, one-off cost than to an unexplained fall in profit.

Does minimising your own tax hurt your borrowing?

It can, and accountants are better at it than most. Lenders assess servicing on profit, typically from your tax returns and financial statements. A practice that has pushed taxable profit down through generous super contributions, family trust distributions, pre-paid expenses and depreciation may look less able to repay than it really is.

Some of that can be recovered through add-backs, where the lender adds legitimate non-cash or discretionary items back to profit. But not every lender accepts every add-back, and few will accept them without a clear schedule. If a loan is likely within the coming couple of years, think about how your own returns will read to a credit officer, and prepare a reconciliation that shows the true earning power of the firm. Our business borrowing power calculator gives a quick sense of what your numbers might support.

Which documents should an accounting firm have ready?

1. The latest two years of accounts and returns, for both the practice entity and each principal
2. A fee analysis by client group, separating recurring from one-off work
3. A work in progress and aged debtors report from your practice management software
4. Recent business bank statements and an ATO integrated client account statement
5. For acquisitions: the heads of agreement, the vendor’s fee schedule and any clawback terms
6. Partnership or shareholder agreements, especially for buy-ins

Could your practice qualify for the funding it needs?

Accounting firms are usually solid borrowers, and banks are a sensible first call for acquisitions and buy-ins. If the bank wants more security, more time or a cleaner set of returns than you can give right now, other lenders can look at the deal on its merits, including your recurring fees and real cash flow.

Our enquiry is brief, taking around sixty seconds, and it carries no credit enquiry, so your own file stays exactly as it was. We don’t scatter applications across the market, so your mobile stays quiet apart from us. A member of our team studies your fee base and lock-up pattern personally and then phones to talk through options. As you’d tell any client, the figures you enter should be accurate; it is the quickest way for us to match the right facility the first time round.

Start your practice finance enquiry →