Bank Loan Covenants

Bank loans are an important source of financing for small and mid-sized businesses, but the loan covenants are an important consideration in accepting the loan. Many bank loan covenants are similar to bond covenants. For example, a financial covenant in both can require the company to maintain a minimum current ratio. Since a bank loan is financing obtained from one source, the covenants can often be more restrictive. A recent white paper sponsored by the Small Business Finance Institute discusses common bank loan covenants and the implications. http://www.cfo.com/whitepapers/index.cfm/displaywhitepaper/14642721