What Is A Covenant In A Loan Agreement

Door Skinss | In Niet gecategoriseerd | on oktober 14, 2021

The first thing I did was read the client`s loan agreement to see if there were any financial credit covenant ratios and of course they existed and the feeling of decline had become deeper. Fortunately for them after the review and test, the client agreed and everything was fine in the world afterwards, but a man who could have been a nightmare if they had not made a financial measures agreement for the client as well as the audit team. Almost all loan agreements with a bank will include some type of clause, whether they are restrictive or negative credit covenants. Failure to meet financial debt obligations of any amount can technically lead to a credit default that can have serious consequences. And therein lies the importance of understanding bank loan covenants specifically for construction companies…

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