Covenants can take any agreed shape and may reflect the specific circumstances of the lending relationship, the project being financed etc.
- Loan to Value Ratio (LTV) is the ratio of a loan to the value of the collateral purchased
- Interest Coverage Ratio (ICR) is the ratio of earnings before interest and tax to the interest expense in the same period
- Debt Service Coverage Ratio (DSCR) is the ratio of annual net operating income to debt obligations owed in the last 12m
The triggering of a loan covenant means the terms of the loan repayment are accelerating and may be placing other legal restrictions on the possible actions of the borrower