How to negotiate a lower margin with a business

2 min read

Step 1Strengthen the case

Step 2Get competing quotes

Step 3Ask for the margin

Operating profit / EBIT (£)

Annual interest payable (£)

Interest cover = operating profit / interest payable. Lenders watch it to check profit comfortably covers interest.

Step 1 — build the strongest possible case

Before negotiating, present clean accounts, a healthy interest cover and a good credit profile. A lower assessed risk justifies a thinner margin — see how to lower the APR you are offered.

Step 2 — get competing quotes

Nothing moves a margin like a genuine alternative. Get quotes from more than one lender and be ready to show them. A lender that wants your business will often match or beat a rival.

Step 3 — negotiate the margin, not the benchmark

Focus your ask on the margin and the fees — that is where the room is. The reference rate is the market’s and cannot move.

Step 4 — negotiate the fees too

The arrangement fee, and whether it is capitalised, are also negotiable and feed the true cost. Ask for them to be reduced or waived.

Step 5 — get the final deal on total cost

Judge the negotiated offer on total amount payable, not the rate alone.

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Frequently asked questions

Can I really negotiate a business loan rate?

You can negotiate the margin and fees, which is where the room is. The reference rate is set by the market. A strong case and a competing quote are your leverage.

What gives me the most leverage?

A genuine competing quote, backed by clean accounts and strong affordability. Lenders price to win business they want, so show them you have options.

Should I negotiate fees as well as the rate?

Yes. Arrangement fees feed the true cost and are often negotiable. Reducing or waiving them can beat a small cut in the rate.