{"id":2531,"date":"2026-09-21T10:55:32","date_gmt":"2026-09-21T15:55:32","guid":{"rendered":"https:\/\/schondube.com\/en\/?page_id=2531"},"modified":"2026-09-21T15:51:29","modified_gmt":"2026-09-21T20:51:29","slug":"commercial-credit-agreement-mexico","status":"publish","type":"page","link":"https:\/\/schondube.com\/en\/commercial-credit-agreements-under-mexican-financial-law\/","title":{"rendered":"Commercial credit agreements under Mexican financial law"},"content":{"rendered":"\n

Credit agreements in Mexico are governed primarily by the Ley General de T\u00edtulos y Operaciones de Cr\u00e9dito (LGTOC), supplemented by the Ley de Instituciones de Cr\u00e9dito and sector-specific regulation from the CNBV. Foreign lenders and borrowers need to understand which credit type fits their transaction, how interest is priced, what instruments document the obligation, and which guarantees can be perfected and enforced. Getting these fundamentals right at the outset prevents costly restructuring or enforcement failures later. For the wider scope of our work, see our Financial Law practice page<\/a>.<\/p>\n\n\n\n

Related issues may require complementary legal analysis, depending on the transaction and operating structure.<\/p>\n\n\n\n

Credit types under Mexican law<\/strong><\/h2>\n\n\n\n

The LGTOC defines several distinct credit categories, each with its own legal mechanics and collateral requirements.<\/p>\n\n\n\n

Term loan<\/strong><\/h3>\n\n\n\n

A lump-sum disbursement repaid over an agreed schedule. The most straightforward structure for term loans. No revolving feature. Principal and interest repayment terms are negotiated freely\u2014Mexican law imposes no mandatory amortization schedule and no interest rate cap.<\/p>\n\n\n\n

Revolving credit facility<\/strong><\/h3>\n\n\n\n

A revolving credit facility: the borrower draws, repays, and draws again up to the committed limit. Similar in function to a US revolving credit facility. Commonly used for working capital needs where disbursement timing is unpredictable.<\/p>\n\n\n\n

Fixed-asset loan<\/strong><\/h3>\n\n\n\n

Designed for fixed asset acquisition\u2014machinery, equipment, permanent improvements to real property. A fixed-asset loan is automatically secured by the acquired assets and by the enterprise’s existing and future fixed assets. The security interest attaches by operation of law, though registration at the RPP strengthens enforceability. Banks and SOFOM entities use this structure heavily for equipment financing.<\/p>\n\n\n\n

Working-capital loan<\/strong><\/h3>\n\n\n\n

Working capital financing tied to a specific production cycle. The law provides that this credit is automatically secured by the raw materials, inventory, and receivables generated by the production activity it finances. Commonly used in agriculture, manufacturing, and tourism hospitality. The automatic security attachment distinguishes this from a simple unsecured working capital line.<\/p>\n\n\n\n

Interest rate mechanics: TIIE as the benchmark<\/strong><\/h2>\n\n\n\n

Mexican law does not impose a single statutory interest-rate cap on commercial credit, although courts may scrutinize manifestly excessive rates. Commercial terms are otherwise negotiated by the parties. In practice, Mexican bank credits and SOFOM credits price off TIIE\u2014the Tasa de Inter\u00e9s Interbancaria de Equilibrio published daily by the Banco de M\u00e9xico.<\/p>\n\n\n\n

TIIE is Mexico’s primary short-term interbank benchmark rate, published each business day. Loan agreements typically specify the TIIE (28-day, 91-day, or 182-day version) plus a fixed spread. For example, a real estate construction loan might be priced at TIIE 28 + 450 basis points. As TIIE moves, the borrower’s interest obligation adjusts accordingly.<\/p>\n\n\n\n

Since Mexico transitioned away from LIBOR exposure, TIIE has become the dominant floating rate reference for all categories of peso-denominated commercial credit. USD-denominated credits from foreign lenders typically reference SOFR or a fixed rate.<\/p>\n\n\n\n

SOFOM E.R. vs. SOFOM E.N.R.<\/strong><\/h2>\n\n\n\n

Foreign investors frequently encounter SOFOM entities as lenders in Mexico. Sociedad Financiera de Objeto M\u00faltiple (SOFOM) entities come in two regulatory tiers:<\/p>\n\n\n\n