Restrictions imposed by loan contracts on the operations of a business,such as requiring that a specific minimum net worth be maintained,a specific debt-to-equity ratio not be exceeded,no dividends be paid to stockholders and so on,are known as _____.

Question

Quizplus · Accepted Answer

Loan covenants are restrictions or agreements imposed by the lender on the borrower in a loan contract. These restrictions could include financial or operational restrictions, such as maintaining a minimum level of net worth, not exceeding a specific debt-to-equity ratio, or not paying dividends to stockholders. These covenants are designed to protect the lender's interests and reduce the borrower's risk of defaulting on the loan.

Restrictions Imposed by Loan Contracts on the Operations of a Business,such