Glossary · The loan itself
Covenant
In short
Covenants are promises or conditions in your loan agreement that you must uphold throughout the loan term. They can be financial, like maintaining a certain debt service coverage ratio, or operational, like providing financial statements regularly.
What it means in a deal
Ignoring covenants can lead to loan default, even if you're making payments. Understand every covenant in your loan agreement. Negotiate any you find restrictive during the commitment letter phase; once signed, they are legally binding.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Covenant
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
See which SBA lenders would fund your deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to approve a 7(a) like yours and flag what trips up approval.
Free · No documents · Usually same-day
Backed by data on 1,000+ SBA lenders and 300,000+ funded deals. Your details go only to lending partners you ask to be matched with — never sold to advertisers.