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

Question

Quizplus · Accepted Answer

Short-term credit agreements are generally less restrictive than long-term loan agreements because they are for shorter periods and involve smaller amounts of money, thus posing less risk to the lender.

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