Loan covenants typically require the borrower to maintain certain financial characteristics such as debt-to-equity ratio, interest coverage ratio, and minimum revenue levels. Collateral is typically described in the loan agreement but is not necessarily a covenant. The lender's responsibilities are not typically included in loan covenants but rather in the overall loan agreement.

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Loan Covenants

Question 28

Multiple Choice

Loan covenants:

A) describe the collateral of the loan.
B) require the borrower to maintain certain financial characteristics.
C) describe the lender's responsibilities.
D) include all the above.

Correct Answer: