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What's it mean to break a loan covenant?

Many companies that SEWN encounters are having challenges because they are in violation of certain loan covenants which has impacted their lending relationship. Often times companies are not familiar with what they are, where to look for them, or even understand what they mean.

It could be because the business owner isn't reading the loan documentation before signing or perhaps they lack the background to understand what's in the document (how many of us have really read the fine print?).

This article from American Express provides explanations about various covenants including financial, operating, collateral, and cash payouts.

If you find yourself in a situation with your bank where you'd like to have a conversation about your options, feel free to contact your local SEWN Director to schedule that no obligation chat.



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