Fill This Form To Receive Instant Help
Homework answers / question archive / Term loans impose restrictions called: A) loan boundaries
Term loans impose restrictions called:
A) loan boundaries.
B) covenants.
C) financial limits.
D) margins.
The correct answer is B) Covenants
One of the disadvantages of term loans as a source of finance is the covenants imposed on the borrowers. In order to protect their interest, the lenders generally impose restrictive conditions on the borrowers known as 'covenants'
Covenants can be of two types: