Which of the following is an example of an affirmative covenant in a commercial loan agreement?

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Multiple Choice

Which of the following is an example of an affirmative covenant in a commercial loan agreement?

Explanation:
Affirmative covenants require the borrower to take a positive action. Delivering financial statements is an affirmative covenant because the borrower must regularly provide financial information to the lender, creating an ongoing obligation. This helps the lender monitor financial health and compliance with the loan terms. The other items are restrictive covenants. Prohibiting new debt limits what the borrower can borrow, capex restrictions limit spending on capital projects, and change in control provisions prevent or require consent if ownership or control shifts. So delivering financial statements best fits as an affirmative covenant.

Affirmative covenants require the borrower to take a positive action. Delivering financial statements is an affirmative covenant because the borrower must regularly provide financial information to the lender, creating an ongoing obligation. This helps the lender monitor financial health and compliance with the loan terms.

The other items are restrictive covenants. Prohibiting new debt limits what the borrower can borrow, capex restrictions limit spending on capital projects, and change in control provisions prevent or require consent if ownership or control shifts. So delivering financial statements best fits as an affirmative covenant.

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