3 steps to negotiate a better commercial line of credit

1. Clarify your needs before talking to your bank

Before discussing rates, guarantees or terms, take the time to clearly define what you need. This often overlooked step is crucial for the negotiation process.
 

Focus on these 3 key points:

• Your cash flow
  Review your cash inflow and outflow over the past 6 to 12 months. Are there slow periods? Peaks? Tighter times? 
   
• Amount requested
  Avoid guessing amounts on a whim. Base your request on realistic figures and forecasts.
   
• Using the line of credit
  Explain clearly why you need it. Is it to finance a project? Support growth? Cope with seasonality?

Ask yourself the same question your banker will likely ask: “Why this amount?  And why now?” If you know the answer, you’re already ahead. 

2. Present your financial data clearly and transparently

Your financial statements are the cornerstone of your application. 

Prepare documents that will allow your bank to evaluate your company’s financial health:

• Detailed cash flow statement 
• Complete financial statements (revenues, expenses, profits, losses) 
• Financial indicators or ratios, if available 
• Analysis of recent results and projections 

Has your business faced any challenges? Be honest. What matters is showing you understand what happened and how you addressed it.

On the other hand, highlight your strengths: increasing revenues, customer diversification, promising projects. And if you’ve previously taken financing and met your obligations, say so. You’ll demonstrate you’re a reliable borrower.

3. Review and negotiate terms

The terms are just as important as the amount. And they’re not set in stone. Before signing anything, make sure you fully understand the offer terms:

• Interest rate applied, fixed or variable
• Monthly or annual fees, often forgotten in the overall calculation
• Required guarantees (property, equipment, personal funds) 
• Renewal terms 
• Reporting obligations

If some terms seem burdensome or restrictive, speak up. For example, some institutions require monthly or quarterly financial reports. Better to know in advance, especially if you lack internal resources to handle this.

You can compare offers from different institutions and come back to the table with strong arguments. 

Put shyness aside: negotiate actively by emphasizing your company’s strength, your administrative rigour and your commitment to managing finances well.

The ball’s in your court

A well-negotiated line of credit can save you thousands in interest fees and significantly improve your financial flexibility. The key is preparation: clear data, a structured vision, and the confidence of a business leader who knows their numbers.

Want to secure your financing and optimize your project management? Our security bond experts are here to support you. Contact your broker today to discover how L’Unique can support you.