Provisions of Loan Agreements Loan Agreement -A legal agreement specifying the terms of a loan and the obligations of the borrower n Covenant --A restriction on a borrower im posed by a lender; for example, the borrower must maintain a minimum amount of working capital This allows the lender to act (or be narned early )when adverse developments are occurring that will affect the borrowing firm 21-921-9 Provisions of Loan Agreements Covenant -- A restriction on a borrower imposed by a lender; for example, the borrower must maintain a minimum amount of working capital. This allows the lender to act (or be narned early) when adverse developments are occurring that will affect the borrowing firm. Loan Agreement -- A legal agreement specifying the terms of a loan and the obligations of the borrower