Value Proposition:
Covenant breaches do not happen suddenly—they accumulate due to deteriorating ratios, misdefined EBITDA, or delays in updating figures.
This template establishes a clear pathway:
Define covenant → Data source → Calculate ratio → Compare to limit → Interpret reason → Remediation plan.
The outcome: a deliverable compliance report for the bank suitable for internal audit.

In 20 seconds: What will you get?

• Covenants Compliance: Compliance calculation for each covenant (Pass/Fail) with margin to threshold.
• Covenants Register: Definition of covenants by bank/facility (limit, frequency, test date).
• Ratios Engine: Calculation of common ratios: debt ratios, ICR, DSCR, and Current Ratio (as activated).
• EBITDA Builder (optional): Build EBITDA from P&L with “Allowed Add-backs” adjustments.
• Debt Definition Control: Define what constitutes Net Debt (loans/facilities/cash) to prevent calculation discrepancies.
• Early Warning: Early warning for covenant breaches when approaching the limit (e.g., 80/90%).
• Compliance Report: Template for bank compliance report (Quarterly/Annual) ready for printing.
• Remediation Plan: Action plan: reduce draw, early repayment, improve collections, Waiver/Reset.
• Audit Pack: Sources of figures + definitions of ratios + change log for audit adjustments.
• Dashboard: Status summary for each bank + most critical covenant + trend of ratios over periods.

Suitable for

• Companies with loans/facilities containing covenants tied to financial statements.
• Treasury and finance teams seeking early warning before official testing.
• Entities dealing with multiple banks needing standardized definitions and reports.

Not Suitable for

• Companies without covenants or with simple financing without relative conditions.
• Those lacking organized P&L/BS data (calculations will be unreliable until sources are organized).

Without Covenants Tracker / With Covenants Tracker

Before Use: 5 Symptoms of High Covenant Risks

• No single file defining each covenant and its test date.
• Debt ratio changes without explanation (EBITDA or Debt definition is inconsistent).
• Interest is recorded but ICR is not measured periodically.
• Management does not know “how much margin of safety” exists before the bank limit.
• Waiver requests happen at the last minute due to lack of early warning.

After Implementation (Two Points Only)

• Control: Pass/Fail + Margin + Trend for each covenant.
• Readiness: Bank compliance report ready + action plan before any breach.

How does the template work in practice?

1) Define covenants and test dates

• Input covenant for each bank/facility: name, minimum/maximum, frequency, test date, measurement period (TTM/Quarter/Year).
• Specify whether it is a “Financial covenant” or “Reporting covenant” (optional).

2) Lock Definitions

• Define EBITDA (Allowed add-backs, exclusions/inclusions) and link it to P&L items.
• Define Net Debt: what is included from loans/facilities and what is deducted from cash/deposits.

3) Calculate ratios and compare limits

• Debt ratios: Net Debt / EBITDA (or Debt/Equity as per agreement).
• ICR: EBITDA / Interest expense or EBIT / Interest (as per contract).
• Display Pass/Fail + Margin to threshold + Status (Green/Amber/Red).

4) Issue Compliance Report + Early Warning

• Quarterly/Annual report for the bank: limit, results, interpretation, signature/approval.
• Early alert when approaching the limit (80/90%) with suggested actions.

5) Remediation Plan

• Typical actions: early repayment, reduce draw, accelerate collections, decrease CAPEX, repricing/Reset, early Waiver request.
• Log Owner/Deadline/Status and the expected impact of the action on the ratio.

Deliverables Components within the File

1. Covenants Register: Definition of covenants and their limits.
2. Definitions: EBITDA / Net Debt / Interest definition.
3. Financial Inputs: P&L and BS and Debt data (import-ready).
4. Ratios Engine: Calculate ratios and Pass/Fail.
5. Early Warning: Thresholds + Trend + Alerts.
6. Compliance Report: Template report ready for the bank.
7. Remediation Plan: Corrective action plan and documentation.
8. Dashboard: Executive summary.

If you want to avoid Waiver under pressure… monitor Covenants before they break

Download Covenants Tracker Now