Glossary · The loan itself
Loan Covenant
In short
These are specific conditions or promises you agree to in your loan agreement, beyond just making payments, to maintain the loan in good standing.
What it means in a deal
Loan covenants can include maintaining certain financial ratios (like DSCR), providing annual financial statements, or restricting significant changes to the business without lender approval. Failing to meet a covenant can put your loan in technical default, so understand them thoroughly and comply.
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 Loan Covenant
- How does a lender ensure the loan covenants in the authorization are accurately reflected in the loan documents?
- What specific financial covenants or conditions must be included in a seller note on full standby for a 7(a) acquisition loan?
- Does an SBA loan have better terms than a regular bank loan?
- What is the minimum loan amount for an SBA 7(a) loan?
- What is the maximum loan amount for an SBA 7(a) loan?
- Is there a typical average loan size for an SBA 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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