Even though Evan's company is a corporation, the bank imposed a loan covenant that required Evan to
A) make a balloon payment after three years.
B) pay a loan origination fee.
C) make quarterly rather than monthly payments.
D) personally guarantee the loan.

Question

Quizplus · Accepted Answer

The loan covenant requiring Evan to personally guarantee the loan indicates that the bank does not fully trust the corporation's ability to repay the loan and wants an additional level of security by having Evan personally liable. This is a common requirement for small business loans. The other options may be included in loan agreements but are not specific to this scenario.

Even Though Evan's Company Is a Corporation, the Bank Imposed