Goodyear is not alone. The soft economy has pushed plenty of businesses into violation of their loan covenants. Some of the lucky ones, including Tweeter, Atlas Air, Conseco, and Beta Brands, have also received waivers.

"An awful lot of companies are busting covenants and obtaining waivers these days," says Carter Pate, managing partner of PricewaterhouseCoopers LLP's Financial Advisory Services.

Obtaining a waiver is usually the final step in renegotiating loan terms with lenders. This comes at a price. Typically, banks can charge as much as 1 percent or more of the outstanding loan to rewrite the loan structure, says Pate. He adds that the difficulty of obtaining a waiver depends on the situation; breaking substantial covenants such as free-cash-flow targets will likely result in lengthy negotiations.

Patrick Chow, CFO of Tarrant Apparel Group, says the ease of getting a waiver often depends on the lender. "Banks that understand your business are more sympathetic," he says. "But no bank wants to put you into default and have a loss."

Tarrant was forced to obtain a waiver from lenders GMAC and Bank of America Corp. when softness in the apparel business put the Los Angeles-based private-label apparel maker out of compliance with its loan covenants.

When approaching the bank, "you have to be honest with yourself," warns Chow. "Setting unrealistic objectives and trying to paint a rosy picture to bankers will kill the company." You don't want to end up knocking on their door again the next quarter, he adds.

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