3. Loan covenants Aa Aa When lenders give loans to borrowers, they use security provisions and covenants that protect them from the risks involved in the loan agreement. Covenants impose limitations and restrictions on the borrower to mitigate the lender's risk The weaker the credit standing of the borrower, the restrictive the loan covenants become. Which types of loans tend to have more security requirements? Term loans to small companies O Term loans to large companies Consider the following case: Martina took a loan from the bank for her company. The loan agreement requires Martina's company to submit periodic financial statements to the lender This case illustrates an example of Which of the following covenants in Martina's loan represents a negative covenant? Limitations are placed on the amount of dividends the borrowing company may pay. The borrower cannot merge or consolidate their business without the lender's approval. Limitations are placed on the level of salaries, bonuses, and advances the borrowing company may give to employees The borrower is required to pay the entire loan amount if they fail to make payments towards the loan