Business & Finance Homework Help

Using the Dry Supply case study for an example of loan documentation process and related requirements, suppose

that Dry Supply and the bank agreed to the following terms:

·         Borrower: Dry Supply Inc.

·         Amount $60,000

·         Purpose: purchase 3 vans

·         Rate: 6%

·         Term: 5 years

·         Repayment: 5 year amortization

·         Guarantee: Kaitlyn and Emily Nielson

·         Other conditions: No mergers or acquisitions without bank consent, debt-to-worth ratio will not exceed 2.5x, monthly internally prepared financial statements, annual reviewed financial statements prepared by accounting firm

List some affirmative and negative covenants that can be applied to Dry Supply.

PageAFFIRMATIVE COVENANTSAn affirmative or positive covenant isa clause in a loan contract thatrequires a borrower to performspecific ationsExamples – Requirement to maintainadequate levels…