How to Negotiate with French Banks for Your Business Project?

1. Develop a solid business plan 

A well-structured business plan is the key to successful negotiations with a French bank. This document should include the following elements:

• A clear description of who you are, your company, the project, and market opportunities.
• Insights into your market, competition, and unique value proposition.
• ESG compliance.
• Detailed financial projections for the next three to five years.
• A risk assessment and mitigation strategies.

French banks highly value transparency and realistic figures. Ensure that your projections are well-supported with data and market analyses.

2. Understand the expectations of French banks

 French banks are generally more conservative than those in some other countries. This means they place a strong emphasis on:

• The solvency, profitability, and liquidity of your business.
• Your personal financial contribution to the project (equity vs. borrowed capital), demonstrating the level of risk you are willing to take.
• The guarantees you can provide.

It is advisable to research in advance the typical conditions and requirements of different banks to be well-prepared for negotiations.

3. Compare different banks and financing options 

Not all French banks offer the same terms and interest rates. It is beneficial to approach multiple banks and compare offers. Additionally, there are various financing options, such as:

• Traditional business loans.
• Leasing or factoring. Note that real estate leasing is structured differently in France.
• Government guarantees and financing through BPI.
• Public aid and subsidies from French or European institutions.
• Alternative financing options such as crowdfunding, business angels, and revenue-based financing.

By weighing different options, you can choose the financing structure that best suits your project.

4. Build a Strong Negotiation Position 

To increase your chances of obtaining a favorable loan, apply the following negotiation techniques:

• Demonstrate your creditworthiness: Show that your business is financially healthy and capable of repaying the loan.
• Use competition to your advantage: Let the bank know that you are also in discussions with other institutions.
• Inquire about special schemes or subsidies: Some banks offer preferential conditions for startups or businesses in specific sectors.
• Negotiate terms: Beyond the interest rate, discuss account conditions, repayment schedules, penalty clauses, and additional guarantees.

5. Have a Local Contact Person 

French banks prefer working with businesses that have a local representative or financial advisor. This could be an accountant, lawyer, or financial consultant familiar with French regulations and banking procedures. A local advisor can facilitate negotiations and increase the likelihood of securing financing. At RFN, we have a specialized financing team with experience in the banking sector and public subsidies.

6. Be Patient and Persistent 

Securing a business loan in France can be a time-consuming process. Banks take their time to thoroughly analyse applications, and decisions are often made at multiple levels. Be patient, remain professional, and ensure that you respond promptly and comprehensively to any requests for additional documentation.

Conclusion 

Negotiating with French banks requires careful preparation, an understanding of local expectations, and a strategic approach. By presenting a solid business plan, exploring multiple financing options, and adopting a strong negotiation strategy, you increase your chances of successfully securing financing for your business project.

Do you need assistance in financing your business in France? RFN is here to provide expert advice and tailored support.