Bloomberg News

NEW YORK - Eroding credit quality is pushing banks to set stricter requirements for loans, even for companies once thought to have little risk associated with their borrowing.

Revlon Inc. has agreed to pay a $1.6 million fee and higher interest rates on its loans in exchange for being released from requirements in order to free up some cash and make it less likely to default.

Under terms of the agreement, Revlon's lenders, led by J.P. Morgan Chase & Co., will permit the company to retain the proceeds from selling the plants it is closing rather than using the money to pay down bank debt. The lenders also agreed to eliminate two financial tests that the company might have flunked this year.

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