# Loan covenants

Promises in the loan agreement that keep binding you after closing.

Your operating freedom after close is written here: distribution limits, minimum coverage ratios, and the reporting a lender can demand. Read them before signing rather than during the first tough quarter, because tripping a covenant can hand the lender power over a business that is still paying on time.

In numbers: A covenant to keep [DSCR](https://searchspheresource.com/glossary/dscr) above 1.25x tested each quarter means a soft quarter that dips to 1.1x can technically default the loan even while payments are current; knowing the ratio and the test date is how you manage to it.

Source: https://searchspheresource.com/glossary/loan-covenants
Not dated: A definition is editorial: what a term means, why it matters, and an example. None of it reads a source that can go stale, so there is no date to take and a stamped one would be the build time wearing a costume.

Site index for machines: https://searchspheresource.com/llms.txt