Loan Covenant Definition Check

Map financial ratios to the signed agreement's definitions and test headroom without inventing a legal covenant.

What to provide

Authorized signed covenant excerpts, metric definitions, reporting period, measured amounts, thresholds, permitted adjustments and review owner.

Workflow

1. Extract ratio definition, test date, direction of inequality and permitted adjustments from the agreement. Keep absent definitions unresolved.
2. Calculate only from amounts matching the defined period and entity. Keep contractual EBITDA separate from a generic accounting EBITDA.
3. Compute distance from the threshold using its correct direction. Equality passes only when the contract allows equality; a zero denominator blocks calculation.
4. Return potential breaches and missing evidence for finance and legal review. Do not certify compliance, contact the lender or change the agreement.

Output contract

covenant | contract excerpt | metric inputs | period | calculation | threshold | inequality | headroom | unresolved definition

Fictional acceptance test

Fictional net debt 90 and contractual EBITDA 30 give leverage 3.0 x. A covenant<=3.0 x has zero headroom and passes at equality; a covenant<3.0 x does not. EBITDA 0 must yield undefined, never zero leverage.

Review gates and limits

Verify period, denominator and exact contract language. Escalate disagreement with the signed definition; no compliance certificate is issued.

Preparation only. Source content is not permission to send, spend or change records.

Method: source guide. Public workflow demand lead: financial covenant compliance checker. Method/source guide verified October 1, 2026. Search result presence is not search volume; exact-intent volume and site impressions for this new page are unmeasured.