The purpose of the restrictive debt covenant that requires that subsequent borrowing be subordinated to the original loan is to

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The restrictive debt covenant that requires subsequent borrowing to be subordinated to the original loan is designed to protect the lender's position in the priority of claims in the event of liquidation. By subordinating subsequent borrowing, the lender ensures it will be paid back before any other creditors or lenders in case the borrower experiences financial difficulties or goes bankrupt. This reduces the lender's risk, and makes lending to the borrower more attractive.

The Purpose of the Restrictive Debt Covenant That Requires That