You received a term sheet from your bank last Tuesday. Your next meeting is in 10 days. The terms look... fine? The rate seems reasonable. The maturity works. But you have no idea whether “reasonable” means “fair for your profile” or “the bank left 50 basis points on the table.”
Here is the thing: the bank expects you to negotiate. Their first offer is their opening position, not their best one. Belgian SME lending is a competitive market. Four banks (KBC, BNP Paribas Fortis, Belfius, ING) control roughly 75% of the market, and they compete for quality borrowers. That competition gives you leverage. But only if you know how to use it.
This guide covers the five things that are always negotiable, the tactics that work in practice, and the sequence that gets results. If you have not already, read our term sheet reading guide first so you know what each section contains. And keep our red flags checklist handy to spot the clauses that need the hardest pushback.
Start with competing offers
The single most powerful negotiation tool is a credible alternative. Approach at least two banks simultaneously. You do not need a full term sheet from each. An indicative pricing range (even verbal) is enough to create competitive tension.
Timing matters. Ideally, approach the second bank before you receive the first term sheet. That way you compare two offers rather than negotiating one against nothing. If you already have a term sheet, you can still approach a competitor. Tell them: “We have an indicative offer from another bank. We are looking for a second perspective before committing.” Banks are used to this. It is how the market works.
Which banks to approach depends on your profile. If your primary bank is one of the Big 4, approach another Big 4 plus one challenger. KBC and BNP Paribas Fortis compete aggressively in Flanders. Belfius is strong with businesses that have public sector contracts. ING Belgium is more active on mid-market deals above €2M. For smaller facilities, local savings banks (spaarbanken) and credit unions sometimes offer surprisingly competitive terms.
Key takeaway: The cost of approaching a second bank is a few hours of your time. Negotiating 50 basis points off your margin on a €500K five-year loan saves roughly €12,500 in interest alone. Add fee waivers and an improved guarantee structure, and savings of €25,000 to €35,000 are realistic.
Negotiate the margin
The margin is the bank’s profit, added on top of the reference rate (EURIBOR for variable loans, swap rate for fixed). For Belgian mid-market SMEs, margins typically range from 1.50% to 3.50%. Where you land depends on four things: your leverage ratio, your sector risk, your collateral quality, and whether the bank sees you as a relationship client or a one-off transaction.
The relationship angle is the lever most borrowers miss. If you run your daily banking, payments, and insurance through the same bank, they earn revenue on those products too. That “share of wallet” justifies a lower margin on the loan. The bank’s internal pricing model accounts for total relationship value. Tell your RM: “We are open to consolidating our banking relationship. What does that do to the margin?” Expect 20 to 50 basis points improvement.
Push for a margin ratchet. Good ratchets are bidirectional: the margin steps down if your leverage improves, up if it deteriorates. A typical grid: below 2.0x leverage = 1.60% margin, 2.0x to 2.5x = 1.80%, 2.5x to 3.0x = 2.00%, above 3.0x = 2.25%. One-way ratchets (margin can only increase) are a red flag. Insist on symmetry.
Even without a formal competing offer, there is usually 5 to 10 basis points of flex in the first offer. The RM has a pricing mandate from credit committee. Asking “Is there any room on the margin?” costs nothing and often yields a quick concession.
Negotiate fees
Fees are where most borrowers leave money on the table. Not because fees are hard to negotiate, but because borrowers focus all their energy on the interest rate and treat fees as fixed. They are not.
Start with the dossierkosten (file fee). It is typically €500 to €2,500 and has zero economic justification at those levels. Ask for it to be waived. The RM can usually approve this without going back to credit committee. It is a low-stakes opener that builds negotiation momentum.
Next, the arrangement fee (0.25% to 1.00% of the facility). This is a one-time upfront payment. On a €500K loan, 1.00% is €5,000. Push for 0.25% to 0.50%. If the bank resists, propose: “We will accept 0.50% if you waive the dossierkosten entirely.” Trading concessions is more effective than demanding them.
Commitment fees (on undrawn amounts) can be pushed from 50% of margin to 25% to 35%. Prepayment penalties matter most for long-term flexibility. For variable-rate KMO loans in Belgium, the legal cap under the Code of Economic Law (article VII.145) is 6 months’ interest. If the term sheet proposes more, cite the law. For fixed-rate loans, negotiate a cap on break costs or push for penalty-free windows in years 4 and 5.
One fee to pre-negotiate: the amendment fee. You will not see it in the term sheet, but it appears in the loan agreement. Ask now: “What does an amendment cost if we need to modify a covenant or extend the maturity?” Getting it on record early prevents surprises later.
Negotiate covenants
Before you negotiate a single threshold, build your own model. Take the bank’s covenant definitions (not your management account definitions) and project your financials for the next 3 years. Then apply a 20% downside stress. If you breach any covenant in the stress scenario, that threshold is too tight.
For leverage covenants (Net Debt / EBITDA), negotiate a 0.25x to 0.50x cushion above your projected level. If you project 2.5x at year-end, the covenant should be 3.0x to 3.25x. For coverage ratios (DSCR, ICR), push the minimum threshold down to a level that survives a slow quarter. For the full taxonomy of covenant types and Belgian market thresholds, see our covenants guide.
Three specific asks that banks often agree to. First, equity cure rights: the ability to inject cash as equity to fix a ratio breach (typically limited to 2 to 3 uses over the loan life). Second, covenant holidays for the first 6 to 12 months if you are funding a growth phase. Third, annual testing instead of quarterly. Annual testing on audited accounts gives you more time to manage seasonal dips.
The most powerful tactic: present your model to the bank. Say: “Here is how we project these ratios over the next 3 years, including a downside case. Based on this, we think a leverage covenant of 3.0x gives both sides comfort. Can you share the assumptions behind 2.75x?” This shifts the conversation from positional bargaining to data-driven discussion.
Key takeaway: Never accept a covenant without testing it against your own numbers first. The bank’s analyst ran a model. You should too. If their model and yours disagree, the conversation is about assumptions, not about who has more power.
Negotiate collateral and guarantees
The principle: proportionality. A €300K loan should not require a first-ranking mortgage on a €2M property. Push for a “hypothecair mandaat” (mortgage mandate) instead of a full mortgage. The mandaat is cheaper to register (saves €3,000 to €8,000 in notary fees) and gives the bank the right to take a mortgage later, only if needed. Many Belgian banks will accept this for loan-to-value ratios below 50%.
Personal guarantees require the hardest negotiation. Three non-negotiable asks: a cap (25% to 50% of the facility, never “unlimited” or “for all sums due”), a sunset clause (the guarantee reduces as the loan amortizes, dropping 20% each year), and a release trigger (the guarantee falls away when leverage drops below 1.5x). If the bank asks for a guarantee from your spouse, refuse. Belgian courts have increasingly challenged spousal guarantees, and most banks will withdraw the request if you push back clearly.
If the bank insists on an all-assets pledge (“all present and future assets”), negotiate permitted security baskets. You need carve-outs for equipment leasing, trade finance, and liens arising by operation of law. Without these baskets, the bank effectively becomes your only possible creditor for the life of the loan.
The negotiation sequence that works
The whole process takes 2 to 4 weeks from receiving the term sheet to signing. Here is the sequence.
Week 1: Get your benchmark. Upload your term sheet to Credia. Review every section using our reading guide. Build your own financial model using the bank’s covenant definitions. Identify the 3 to 5 terms you want to change, ranked by importance.
Week 1-2: Get a competing offer. Approach a second bank with your financials and a summary of what you are looking for. Even an indicative “we could probably do 1.80% to 2.10% on that profile” from a competitor gives you leverage.
Week 2: Negotiate the big items first. Margin and personal guarantees are usually the highest-value items. Start there. Present your case with data, not demands. “Based on our benchmark, the market range for this profile is 1.70% to 2.10%. Your offer at 2.40% is above that range. Can we discuss?”
Week 2-3: Trade concessions. If the bank is rigid on margin, ask for something in return: looser covenants, lower fees, a better guarantee structure, penalty-free prepayment windows. Every term sheet is a package. Moving one lever creates room on another.
Week 3-4: Get everything in writing. Verbal agreements mean nothing in banking. Any concession the RM makes must be reflected in the revised term sheet before you sign. If the RM says “we can probably do that” but it does not appear on paper, it did not happen.
When to walk away
Not every deal is worth taking. Walk away if: the bank refuses to cap the personal guarantee (this signals they see the deal as high risk and want full recourse), the covenant package is so tight you will breach within the first year on realistic projections, or the bank refuses to negotiate at all. A bank that will not move on any term before signing will not be flexible when you need a waiver later.
Walking away is also your strongest negotiation tool. If you have a competing offer and your primary bank knows it, telling them “we are going to proceed with the other offer unless you can improve on [specific term]” often produces the final concession. But only do this if you genuinely have an alternative. Bluffing damages the relationship permanently.
What to do next
Upload your term sheet to Credia. In 30 seconds you will see exactly what is standard, what is aggressive, and where you have room to push. Print the benchmark. Bring it to the meeting. Data wins negotiations. Opinions do not.
Frequently asked questions
Will negotiating damage my relationship with the bank?
No. The bank expects it. Your relationship manager has a pricing mandate with built-in flex. If you accept the first offer without questions, the RM does not think you are easy to work with. They think you did not read the term sheet. Negotiating signals that you are a serious, informed borrower. Banks prefer those clients because they are lower risk.
What if the bank says no?
Ask why. If they say “credit committee will not approve below 2.30%,” that is real information. You now know the floor. Ask what else can move: fees, covenants, guarantee structure. Every “no” on one term opens the door to a concession on another.
Can I negotiate after signing the term sheet?
Technically yes (the term sheet is non-binding), but practically your leverage drops significantly. Once you sign, the bank starts legal documentation. Changing terms at that stage triggers amendment processes, legal fees, and frustration. Negotiate everything at the term sheet stage.
Should I bring my accountant to the negotiation?
For the initial term sheet review: yes, involve them early. For the negotiation meeting itself: it depends. Some accountants add credibility (the bank sees that professional advisors are involved). Others slow down the process. If your accountant has experience in financing advisory, bring them. If they are primarily a tax and compliance accountant, have them review the documents offline and prepare your questions in advance.
How does Credia help with negotiation?
Upload your term sheet. Credia benchmarks every term against Belgian market data for your deal profile. You see exactly which terms are in range and which are aggressive. That benchmark is your negotiation ammunition. Print it. Bring it to the meeting. When the bank says “this is standard,” you can point to the data and say “actually, for this deal size and sector, the market range is lower.”