Glossary · The loan itself
Loan Covenants
In short
These are conditions in your loan agreement that you must continue to meet throughout the loan's term. They protect the lender by ensuring the business remains financially sound.
What it means in a deal
Your SBA loan agreement will include covenants, such as maintaining specific debt service coverage ratios or providing regular financial statements. Breaching a covenant, even if you're making payments, can put you in default. Understand these requirements thoroughly and ensure your financial management practices can consistently meet them.
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 Covenants
- 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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