Affirmative Covenants Loan Agreement

Options B and C are all affirmative alliances. They are administrative and do not limit activity. An affirmative covenant is a kind of promise or contract that requires a party to comply with certain conditions. For example, an affirmative obligation could provide that an issuer will maintain an adequate level of assurance or present audited financial statements. Lenders may include negative credit agreements that require the business owner to seek permission from the bank to take certain measures, as these measures can change the capital structure of the business. Such requirements, to get permission from the lender, may feel like the business owner has to ask, “Mother, can I ?… ” and are often not visible to the business owner until several months or even years after receiving the loan.

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