Lender Financing: It’s a Balancing Act

Simply put, if a company has been overspending the past few years, such as taking large salaries or distributions out of the company, they don't have the wherewithal to weather the tough times, she contends. "Banks set covenants to help a borrower keep its balance sheet and income statement in line. It is not to restrict a company, but to help it keep a proper balance."