Managing stricter loan covenants

As many businesses seek new sources of credit, they may face tighter loan covenants. The Journal of Accountancy recommends borrowers consider the following before talking to a lender:

1. Negotiate and monitor ratios.
2. Prepare for a financial statement audit.
3. Watch out for a positive cash flow covenant.
4. Get ready for new rate structures.
5. Be prepared for more stringent “personal guarantees.”
6. Know what’s typical.

Some businesses may be eligible for help from the Small Business Administration, which is implementing new programs with funding from the economic stimulus package. You can read more about the SBA programs in our previous posts here, here, here, and here.