Glossary · Doing the deal
Covenant compliance check
In short
This is when your lender regularly reviews your business's financial performance to ensure you're meeting the specific conditions outlined in your loan agreement. It's how the bank makes sure you're keeping your promises.
What it means in a deal
Your SBA loan will include covenants, such as maintaining certain debt service coverage ratios or liquidity levels. The lender will conduct regular covenant compliance checks. Understand these requirements upfront and proactively manage your business to stay within them, as breaches can trigger a loan default.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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 compliance check
- Does the SBA check my personal credit score directly when I apply?
- What kind of records does the SBA check about my personal background?
- Does the SBA check my personal background, like criminal history, for a loan?
- How do I check if a specific franchise system is eligible for SBA 7(a) financing?
- Does the SBA check for past defaults on federal debts, like student loans or prior SBA loans?
- How does SBA Form 1919 ensure borrower eligibility compliance for a 7(a) loan?
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.
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