covenant business definition
- A written promise or contract by two or more parties who each promise to do something or not do something.
- A clause in a loan agreement written to protect the lender's claim by keeping the borrower's financial position approximately the same as it was at the time the loan agreement was made. Essentially, covenants spell out what the borrower may do and must do in order to satisfy the terms of the loan. Also called protective covenant, restrictive covenant. See also negative covenant, positive covenant.
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