Restrictive covenants, coupled with standard debt provisions, allow the lender to monitor and control the borrower's activities in order to protect itself against increases in borrower risk.

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Restrictive covenants are commonly used by lenders to monitor and control the borrower's activities, such as limiting dividend payments, incurring additional debt, or making significant investments, in order to protect themselves against potential increases in borrower risk. Coupled with standard debt provisions, such as interest rates and collateral requirements, restrictive covenants serve as an additional layer of protection for lenders.

Restrictive Covenants, Coupled with Standard Debt Provisions, Allow the Lender