intradaa.blogg.se - Loan agreement extension template

The borrower must not pay any dividends to common shareholders without the express written consent of the lender.The borrower must provide an aged accounts receivable listing and a compliance certificate monthly.Non-standard loan covenants are typical with commercial lending since business operations and financial results are more complex than personal lending. Non-standard loan covenants are designed based on particular characteristics or risks related to a credit request or a borrower.

(meaning a borrower cannot sell the car for which they took out a vehicle loan without repaying it in full, as that vehicle is collateral security).

The borrower may not sell any physical assets underpinning the credit exposure without repaying the credit in full.

The borrower must make principal + interest payments when due.

Standard loan covenants outline circumstances or behaviors that are often taken for granted but must still be stipulated in a credit agreement for the legal enforceability of the contract.

Standard loan covenants are generally outlined in a boilerplate format, meaning they’re standard for all borrowers. Loan covenants may be categorized in a variety of ways. A loan covenant violation is also known as a covenant breach, a form of technical default.Loan covenants can be a powerful tool to help align incentives between a lender and a borrower or to mitigate transaction (or borrower)-specific risks that may otherwise be unavoidable.Loan covenants are circumstances or behaviors that a borrower must (or must not) engage in, and they are expressly documented in the credit agreement or loan contract.