How Conditions and Covenants Strengthen Loan Structure

On Demand Course

Instructor: Dev Strischek

Duration: 1 HR

What You'll Learn

Conditions and covenants protect the bank’s repayment sources. For example, typical conditions include adequate and sufficient insurance coverages to protect the borrower’s earning assets, borrower certification that its taxes are current, assets are in good working order, etc. Covenants often require minimum working capital and prohibit excessive leverage. How many covenants are too many? This webinar offers an answer to that question, and the answer begins with as few as possible as long as they provide an effective lockdown of the financial statements. Further, a bank’s standard loan agreements should contain sufficient and adequate conditions to protect the bank, and the bank’s standard documentation should offer several options for covenants.

Topics covered in this session

Definition and examples of Conditions and Covenants
- Negative and affirmative
- Quantitative and qualitative
Fundamental mechanics of covenants
- Time, quality, quantity and terms
How to use covenants to put horizontal and vertical locks on balance sheet
Administrative issues
- Monitoring covenant compliance
- Resolving covenant breaches
- Appropriate policy, process and procedure

*This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

About the Author:

Dev Strischek

A frequent speaker, instructor, advisor and writer on credit risk and commercial banking topics and issues, Martin J. "Dev" Strischek is principal of Devon Risk Advisory Group based near Atlanta, Georgia. Dev advises, trains, and develops for financial organizations risk management solutions and recommendations on a range of issues and topics, e.g., credit risk management, credit culture, credit policy, credit and lending training, etc. Dev is the former SVP and senior credit policy officer at SunTrust Bank, Atlanta. He was responsible for developing, implementing, and administering credit policies for SunTrust’s wholesale lines of business--commercial, commercial real estate, corporate investment banking, capital markets, business banking and private wealth management. Prior to SunTrust, Mr. Strischek was chief credit officer for Barnett Bank’s Palm Beach market. Dev is also a member of the Financial Accounting Standards Board’s (FASB’s) Private Company Council (PCC).

On-Demand Course