Get your loan today If you require a litigation loan to help a legal dispute of which you do not have the finds for, give our team a call today, we can be sure to help you out.
If your business is involved in a legal dispute you will need to ensure you have the finances in place to cover your costs. This can be considerable and many businesses may not have ready access to the required funds. While businesses will look to avoid legal proceedings as much as possible sometimes they can be unavoidable for a wide range of reasons. When they do occur, the costs can be significant. At times, the costs may even jeopardise the ongoing viability of the business. A litigation loan can be a way for a business to bridge the gap. What is a litigation loan, what can they be used for and how can you apply for one?
What is a litigation loan?
A litigation loan is a formal lending arrangement where a lender provides funds to individuals or businesses that are involved in a legal dispute. In the domestic sphere, they are commonly used in divorce cases where one partner may retain access to the couple’s funds. Similarly, in businesses, they are sometimes used when business partners are in dispute. However, business litigation loans can also have a wide range of other uses.
What can a litigation loan be used for?
Legal proceedings can be highly costly with a range of expenses being incurred over time. Finding the funds to pay these charges can be difficult, placing a severe strain on personal or business finances. A litigation loan can be used to cover a range of different expenses that a business incurs during legal proceedings. These can include:
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Legal Fees
Litigation loans are commonly used to pay for legal advice, expenses and representations. They enable businesses or partners to access legal services that they wouldn’t otherwise be able to afford.
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Court Cost
Legal proceedings generate various charges including court fees, filing charges, and administrative costs. Taken together, these can be substantial. A litigation loan can help to cover these charges, spreading the cost over time.
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Expert Witnesses
The strength of your arguments may depend on having access to witnesses with expert knowledge of areas of business pertinent to your case. Expert witnesses can provide knowledge, insight and testimony and in some cases, their fees can be significant. Litigation loans enable businesses to access experts who may help them to strengthen their case.
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Day-to-Day Expenses
If your business is entangled in legal proceedings it can place extra strains on your regular operations. They can take key people away from work for a period of time or force you to close for a period. A litigation loan can provide you with extra funds to help bridge financial gaps caused by legal proceedings.
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Living Expenses
Individuals pursuing business litigation may require extra financial support to cover daily living expenses throughout the legal process. In short, a litigation loan can be used to cover a wide range of financial expenses associated with legal proceedings. They give businesses the financial means they need to handle the extra expenses that may be incurred.
Litigation loans for businesses
Business legal disputes can occur for many reasons. When they do happen, they can pose a significant threat to the financial stability of the business. A litigation loan can be a valuable lifeline for businesses that are grappling with any kind of legal challenge. Usually taken out on a short-term basis, they provide a fast and simple means by which to access necessary funds. A litigation loan can give your business a cash injection when you need it most. Some of the scenarios where a business may require a litigation loan include:
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Contract Disputes
Businesses can use a litigation loan to pursue claims related to contractual disagreements, non-payments or breached contracts.
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Intellectual Property
If a business finds that its patents, trademarks or copyrights have been infringed it may wish to take legal action. A litigation loan may be appropriate in such instances.
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Commercial Disputes
Businesses can be complex operations involving a range of competing interests and personalities. As a result, commercial disputes regularly arise. While most of these will be resolved without recourse to litigation, sometimes legal proceedings may be required. Litigation loans can be used to cover the costs associated with often protracted commercial disputes.
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Product Liability Cases
If a business is sued due to product defects or hazards, a litigation loan can be used to support their legal defence. As a flexible form of finance, litigation loans can be used to cover a number of legal costs and expenses. If your business is involved in legal proceedings, then a fast, flexible short-term litigation loan gives you the extra funds you need to pay your legal costs and keep your business operative.
How much does a litigation loan cost?
As with any other form of business finance, a litigation loan does have some costs. These can vary considerably depending on the amount of money borrowed, the term of the loan and the lender. Litigation loans are usually completed as a short-term business loan. These can be highly competitive and will be taken out for a range of durations from a few months to five years. The shorter your loan term, the less you will usually pay back overall depending on the interest rate. Although short-term business loans generally have higher interest rates than longer-term loans you will usually pay less interest overall due to the shorter repayment period. Other costs that are important to consider are the arrangement fees and any early repayment charges. Different lenders will have different charges but these should be upfront, allowing you to properly assess the relative costs of loans from different lenders. It’s important to explore the market fully and compare different lenders to find the best one for you. Businesses looking for a litigation loan will generally find it more helpful to work with a specialist business lender. These are likely to better understand the requirements of commercial customers and will have a product range that reflects those requirements. Before agreeing to a short-term business loan to pay for legal proceedings it’s essential that you ensure you can meet the repayment terms.
Litigation loans vs litigation funding
Litigation loans and litigation funding are often confused but the two methods of funding legal costs are different. Each has a range of costs and benefits and may be more suitable for different borrowers and businesses. A litigation loan is typically a simple short-term business loan that gives businesses the capital they need to cover legal costs and maintain business operations. These are highly flexible, allowing business owners to spend the capital as they wish. The repayment terms are clearly set out and provide an easy-to-understand arrangement that empowers business owners to concentrate on obtaining a successful legal outcome. Litigation funding, on the other hand, is more akin to an investment. A third-party funder provides capital to cover your legal expenses. In return, they expect to receive an agreed share of the final settlement. These can be complex arrangements with the number of suitable investors being limited. They can take some time to arrange and will come with a range of responsibilities. As with other forms of business investment, the funding party may place restrictions on how the finance is to be spent. For most businesses, litigation loans provide the fast, flexible funding that businesses need during legal proceedings. With easy-to-understand repayment terms and no restrictions placed on how the money is spent, a litigation loan gives business owners maximum flexibility at what can be a challenging time.
Litigation loans with Business Finance House
If your business is faced with the costs associated with legal proceedings, then Business Finance House can help you find the right short-term loan for you. We work with 80 lenders to find the most appropriate loan for your particular circumstances, ensuring you receive the most competitive loan as quickly as possible. With a wealth of experience, our expert team is on hand to help you find the right funding solution for your business needs. Why not contact us today to find out more and to discuss your options?
With a wealth of experience, our expert team is on hand to help you find the right funding solution for your business needs, we cover all locations, from business loans in Liverpool, Cheshire, or nationwide!
Want to know how to get a short term business loan, then why not contact us today to find out more and to discuss your options?
