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Bankers avoid brand-destroying moves when restructuring a loan

In Kimberly Hellstrom’s Marketing Watch Blog, Al Reis (who wrote ‘the book’ on branding) is back with this blogpost.

As you are considering a restructure on a business loan, you may be drawn into brainstorming possible solutions to solve the short-term (we hope) cash shortages. Your loan manager may want to better understand the business strategy for turning things around.

Al Reis reminds us that damaging the brand for short-term gains can backfire when the recession starts to fade. Think Packard vs Cadillac coming of the Depression.

Business owners and managers are walking several tightropes at once.

  • Bring in cash to keep from laying off (more) employees.
  • Accommodate customers who need a discount to stay in business.
  • Meet DCR and other covenants required by the bank.

To be positioned when the market turns, though, the brand still has to be clear in the minds of the customers.

I think some discounting, cost cutting or deals will be tolerated during the downturn better than at other times. But if a business goes down that road, they need to think carefully about how to do it, and how to move back in position quickly.

Read the article, and don’t be too quick to encourage sales-boosting activity that will backfire.

About the Author
Linda Keith CPA is an expert in credit risk readiness and credit analysis. She trains banks and credit unions throughout the United States, both in-house and in open-enrollment sessions, on Tax Return and Financial Statement Analysis. She is in the trenches with lenders, analysts and underwriters helping them say "yes" to good loans. Creator of the Tax Return Analysis Virtual Classroom at, she speaks at banking associations on risk management, lending and director finance topics.
  1. Mitchell Gooze

    Well stated, Linda. In our rush to meet short-term goals we often end-up doing longer term damage. Sometimes the perpetrators of the damage are gone before it takes effect, but in today’s ultra-fast-moving world, that may no longer be true. And in any event, it is the job of the company’s current stewards to assure its long term survival.