covenant questions
Say you have a company with pretty high customer concentration, what are some typical covenants to mitigate the risk from a lender's perspective, besides the usual financial covenants?
Say you have a company with pretty high customer concentration, what are some typical covenants to mitigate the risk from a lender's perspective, besides the usual financial covenants?
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If the company has a invoice discounting facility granted, the bank will seek to mitigate the concentration on a single customer to a certain % (typically defined once the facility is granted). However, technically it's not a covenant as the company presents the invoice to the bank and from time to time the bank decides whether or not to discount the invoice. Perhaps it can be defined as a 'operating limit' of the credit line.
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