In the nick of time – Spotting distressed borrowers
Abstract: The recession has impacted virtually every type of business. But how can a lender differentiate a temporary lag from irreparable mismanagement? Which borrowers are salvageable, and which are not? This article discusses not only red flags to watch out for in financial statements, but non-numeric indicators of distress, as well — such as employee turmoil, competitive pressures, management crises and a deteriorating track record. It describes proactive steps lenders can take, while a sidebar warns against lenient lending terms.