Evergreening
What is evergreening a loan?
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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
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Evergreening is keeping a weak loan looking current by renewing, extending or topping it up so that the borrower meets its payments with new lending rather than its own cash — rolling a maturity that cannot be repaid, adding unpaid interest to the debt, raising a limit to cover the arrears. It postpones recognising a problem and usually makes it larger, because the exposure grows while the business does not change. A desk tells forbearance from evergreening by the plan: a concession with conditions and a route back is forbearance; a renewal with neither is a loss being carried forward.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
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