Q: I'm interested in a session on Covenant Testing.
A: Below is a webinar we offer on the most useful covenants, in our opinion, rather than a webinar about how and when to test if covenants are honored or violated.
Covenant Use in Controlling Cash Outflows
As a general rule, the riskier the credit, the more often covenants are monitored or tested, which means that the borrower has to provide the financial data for such testing. That, in turn, should be stated clearly in the loan agreement, e.g., borrower shall provide a company-prepared income statement, balance sheet, and FASB 95 cash flow statement within 15 days after the end of each calendar quarter.
If you're interested in what to do when a covenant is breached, we address that in Session 7 of the Commercial Business Underwriting series.
Identifying and Mitigating Repayment Risks
Course overview: Covenant Use in Controlling Cash Outflows