Long-term loan agreements always contain provisions, or covenants, which constrain the firm's future actions. Short-term credit agreements are just as restrictive in order to protect the interests of the lender.

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Short-term credit agreements are generally less restrictive than long-term loan agreements, as they are typically for smaller amounts and shorter durations, reducing the lender's risk.

Long-Term Loan Agreements Always Contain Provisions, or Covenants, Which Constrain