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Management article
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Reference no. 82201
Published by: Harvard Business Publishing
Published in: "Harvard Business Review", 1982

Abstract

The loan negotiation process between bankers and company managers is not always skewed in the banker''s favor. Success depends on negotiating strategy. Managers need to learn to think like the banker and identify the bank''s objectives in making the loan, meet those objectives with the least damage to their company''s position, order the restrictive covenants by priority so they can give in on one or two without hindering the company''s overall objectives, and influence the banker to relax or withdraw noncrucial restrictions.

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Abstract

The loan negotiation process between bankers and company managers is not always skewed in the banker''s favor. Success depends on negotiating strategy. Managers need to learn to think like the banker and identify the bank''s objectives in making the loan, meet those objectives with the least damage to their company''s position, order the restrictive covenants by priority so they can give in on one or two without hindering the company''s overall objectives, and influence the banker to relax or withdraw noncrucial restrictions.

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