Loan Covenants

Loan Covenants
Corporate Finance Institute (CFI) on-demand courses are designed for finance professionals and industry practitioners who want to master the art of corporate finance. The courses move through three levels of mastery for anyone looking to be an expert in financial modeling, valuation, and financial analysis. Participants typically include professionals in entry to mid-level positions in financial planning and analysis (FP&A), corporate development, treasury, investor relations, and capital markets. All participants are automatically issued certificates of completion after successfully finishing each course.

NOTE: Course login details are normally sent to registrants within one week from date of registration.


In this Loan Covenants course, we will demonstrate how the loan covenants are used in the lending process. We will start this course by defining covenants and discussing how they benefit both the lender and the borrower. We will then compare different types of covenants and discuss what a credit analyst should do in the event of a covenant breach.

After that, we will discuss key financial covenant ratios such as total liabilities to equity ratio (debt to equity), debt service coverage ratio (DSCR), working capital ratio, and debt to EBITDA ratio. We will explain what these ratios are, how to calculate them, and how they are used in evaluating a company's creditworthiness. Finally, we will complete a case study where you need to build a covenant model in Excel. We will calculate a company's key credit metrics based on the historical and forecast financial statements. We will compare these metrics to the covenants that are set for this business and are suitable for the loan.

    Upon completing this course, you will be able to: 

    • Understand the key concepts of covenants in a loan agreement
    • Explain different types of loan covenants
    • Calculate key financial covenant metrics
    • Use a financial model in Excel to model financial covenants
    CPD- 3 Hours
    4/1/2022 - 3/31/2023 11:59 PM