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Do Financial Covenants Have a Place in Equipment Finance? By James M. Johnson, PhD, and Barry S. Marks
Financial covenants are promises by a borrower to lessee to achieve or maintain specific financial targets, often expressed as ratios, such as net worth or total debt levels, or cash flow debt coverage ratios. A survey of banks, independents and middle-market companies examines whether in the wake of the Great Recession, financial covenants have before commonplace in equipment finance documentation.