A landmark case in Mexico regarding the consequences of not properly negotiating a business loan is that of Comercial Mexicana in 2008. The company, one of the largest retail chains in the country, faced serious financial problems after contracting complex financial instruments, leading to its insolvency and restructuring. This case highlights the importance of thoroughly understanding the terms of a loan and the risks involved in not negotiating its conditions correctly.

Obtaining a business loan can be a key strategy for a company’s growth, but it also carries risks if its terms are not well negotiated. Many companies accept bank contracts without a detailed analysis, which can result in excessive payments, unexpected penalties, or other serious financial issues. Below, we share the legal keys to negotiating better terms for a business loan.

 

1. Carefully review the contract clauses

Before signing any loan contract, it is essential to analyze all its clauses. Some aspects to review include:

• Interest rate (fixed or variable and its reference, for example, TIIE or SOFR).

• Payment terms and conditions, including the possibility of early payments.

• Fees and penalties for late payments or prepayment.

• Guarantees and collateral required by the bank.

• Rate adjustment conditions in variable interest contracts.

There are cases of companies that, years ago, negotiated a loan with a variable interest rate without analyzing its future behavior and later found themselves trapped in a significant increase in credit costs when the reference rate rose drastically.

 

2. Negotiate more favorable terms

Banks do not always offer the best conditions from the outset. Depending on the company’s credit history and repayment capacity, it is possible to negotiate:

• Lower interest rates if financial strength is demonstrated.

• Greater flexibility in payments in case of variable income.

• Elimination of prepayment penalties, allowing early debt settlement without additional costs.

• Reduction of opening or administration fees.

 

3. Compare options and avoid signing with the first bank

A common mistake is accepting the first offer without evaluating other options. Consulting different financial institutions (banks, SOFOMES, fintechs) can result in better conditions. Additionally, some institutions offer credit lines specifically designed for certain industries or business models.

4. Consider alternative financing options 

While bank loans are one of the most common options, there are other alternatives such as:

• Financial leasing (for acquiring assets without depleting capital).

• Factoring (to improve liquidity through accounts receivable).

• Crowdfunding, especially for newly created businesses (or startups).

• Government or international organization loans with preferential rates.

A successful example is the case of Kavak, the Mexican used car buying and selling startup, which avoided exclusive dependence on bank loans and opted for alternative financing through venture capital funding.

 

5. Seek legal advice before signing

A lawyer specializing in banking and financial law can identify abusive clauses, foresee risks, and ensure that the loan terms are fair for your company. Legal advice is key to avoiding surprises and protecting the business’s interests in the long run.

Negotiating a business loan with knowledge and legal backing can make the difference between a smart financial decision and a future economic problem. Do not underestimate the importance of reviewing terms, comparing options, and having professional advice.

If you need help reviewing, negotiating, or structuring a business loan, at DMA Legal we have experts in banking and financial law ready to assist you.

📩 Contact us at: dmendez@dma-legal.com

🌐 Visit our website: www.dmalegal.com.mx