{"ok":true,"canonical_url":"https://dealroom.so/glossary/covenant","api_url":"https://dealroom.so/api/public/glossary/covenant","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"covenant","term":"Covenant","group":"The loan itself","definition":"Covenants are promises or conditions in your loan agreement that you must uphold throughout the loan term. They can be financial, like maintaining a certain debt service coverage ratio, or operational, like providing financial statements regularly.","what_it_means":"Ignoring covenants can lead to loan default, even if you're making payments. Understand every covenant in your loan agreement. Negotiate any you find restrictive during the commitment letter phase; once signed, they are legally binding.","url":"https://dealroom.so/glossary/covenant","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-agreement","term":"Loan agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"loan-default","term":"Loan default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","term":"Personal guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"commitment-letter","term":"Commitment Letter","url":"https://dealroom.so/glossary/commitment-letter"}],"related_questions":[{"question":"How does a lender ensure the loan covenants in the authorization are accurately reflected in the loan documents?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-ensure-the-loan-covenants-in-the-authorization-are-accurately-reflected-"},{"question":"What specific financial covenants or conditions must be included in a seller note on full standby for a 7(a) acquisition loan?","url":"https://dealroom.so/for-lenders/questions/what-specific-financial-covenants-or-conditions-must-be-included-in-a-seller-note-on-full-"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Covenant","url":"https://dealroom.so/glossary/covenant","source_type":"DealRoom Data"}}