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Update: I just read a report that 40% of small business loans over $500k have some kind of covenant attached
Honestly, I was looking at a loan for a new truck fleet and my bank guy in Phoenix mentioned covenants. Tbh, I had no clue what he was talking about, so I looked it up last night. Found this report from a small business group that said almost half of big loans have these rules you have to follow. Ngl, it makes me nervous about signing anything before I really get it. Has anyone here had to deal with loan covenants and how strict are they usually?
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miles721mo ago
They can block you from selling your own stuff.
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shane65528d ago
Man I couldn't even keep a 10k minimum if my wallet had a seatbelt on it.
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Look at it from the bank's side. They're handing out half a million bucks, they gotta make sure you don't run the business into a ditch and skip town. Covenants are just guardrails, like keeping your debt below a certain level or hitting a minimum cash balance. My last loan had a rule about keeping my business checking above 10k, which was just smart anyway. It's not them being jerks, it's them making sure you stay solvent so you can actually pay them back.
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