Standard Financial Covenants For Loan Agreement
Publisher one
Genie AIJurisdiction
England and WalesCost
Free to useRelevant sectors
Type of legal document
💰 Financial covenantsBusiness activity
Create financial covenantsA financial covenant is a legally binding agreement between a borrowing company and a lender that imposes certain restrictions on the borrower in order to protect the lender's interests. Financial covenants typically cover areas such as debt levels, profitability, and cash flow.
Financial covenants are provisions in a loan agreement that aim to ensure the borrower's ability to meet their financial obligations throughout the term of the loan. These covenants typically set various performance benchmarks related to the borrower's financial health, such as maintaining a minimum level of profitability, liquidity, or debt-to-equity ratio.
This template would include a range of commonly used financial covenants, which can be tailored to reflect the specifics of the loan arrangement. It may cover aspects such as:
1. Debt Service Coverage Ratio (DSCR): This ratio measures the borrower's ability to generate sufficient cash flow to cover interest and principal payments. The covenant may stipulate a minimum acceptable DSCR that the borrower must maintain.
2. Interest Coverage Ratio (ICR): Similar to DSCR, this ratio assesses the borrower's ability to cover interest expenses. The covenant may require the borrower to maintain a certain level of ICR to ensure adequate interest coverage.
3. Current Ratio: This ratio measures the borrower's short-term liquidity strength by comparing current assets to current liabilities. The template may set a specific current ratio threshold to ensure sufficient liquidity.
4. Leverage Ratio: This covenant monitors the borrower's debt levels relative to their equity or assets. It may impose limits on leverage to protect the lender's interests and minimize the borrower's risk of insolvency.
5. Working Capital: This covenant may specify the minimum working capital requirement to ensure the borrower's operational efficiency and determine that they have enough current assets to cover short-term liabilities.
6. Capital Expenditure: This covenant might limit the borrower's ability to spend on capital-intensive projects that could potentially strain their financial resources or negatively impact loan repayment.
The template would also outline the consequences of breaching any of the financial covenants, such as providing the lender with rights to demand immediate repayment, increase interest rates, or negotiate other favorable terms. It is essential for both parties to carefully review and negotiate these provisions to safeguard their respective interests while entering into a loan agreement under UK law.
How it works
Try using Genie's Free AI Legal Assistant
Generate quality, formatted contracts with AI
Can’t find the right template? Create the bespoke agreement in minutes by conversing with our AI and tailoring to your needs
Let our Legal AI make edits for you
Ask Genie to edit your document in the same way you’d ask a paralegal. Genie makes track changes, and explains its thinking just like a junior lawyer would.
AI review
Can’t find the right template? Create the bespoke agreement in minutes by conversing with our AI and tailoring to your needs
Book your personalised demo now
Similar legal templates
Standard B2B Contract For Transferring Domain Name (Seller Friendly)
Publisher
Genie AIJurisdiction
England and WalesStandard Application For Intra Company Transfer Switch To Skilled Worker (Letter To Home Office)
In the context of UK immigration law, an intra-company transfer enables an employee from an overseas branch or subsidiary of a multinational company to be transferred to the UK branch for a certain period, typically because their specialized skills or knowledge are needed there. However, if the individual wishes to switch their immigration status from an intra-company transfer to a skilled worker category, this application template becomes relevant.
The template includes specific information required to complete the application process. This may include details about the applicant's current work position, their sponsoring employer, the duration and purpose of the transfer, their continuous employment at the overseas branch, and their intention to work in a skilled worker capacity in the UK. Additionally, the letter may provide a justification for the switch, emphasizing how the skilled worker route aligns with the applicant's qualifications and the UK employer's need for their expertise.
By using this legal template, applicants can ensure that they submit a comprehensive and accurate application. As this template is tailored specifically for the UK legal framework, it adheres to the necessary guidelines and regulations set by the Home Office, enhancing the individual's chances of a successful transfer to the skilled worker category.
Publisher
Genie AIJurisdiction
England and WalesSocial Video Producer Contract
This Social Video Producer contract template is designed for a commercial social videography organisation (or an individual social video producer) to use when contracting out their skills and services in exchange for payment. This contract sets out the type of social videography and social-videography-related services to be completed by the social video producer on behalf of the client, with consideration for expectations around quality and delivery timescales, as well as any mitigating circumstances. This contract allows for payment to be made by the client to the social videography firm or individual social video producer on a weekly or monthly basis but can easily be edited to account for other payment schedules and could be altered to include bonuses conditional on performance. It can also be fully customised with the details of the two parties and the duration of the contract and can be printed, downloaded and edited freely as part of our mission to open source business legals. This is a template for contractors who fit outside of the UK's off-payroll working rules (IR35).
