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Sporting Chance?

Loan agreements

By
This story appears in the February 2000 issue of Business Start-Ups magazine.

Q: Our bank requires a loan agreement as a condition for a long-term loan to our sports memorabilia store. What gives?

A: Welcome to the big leagues. With term loans, banks impose conditions--called covenants--on your future operations. The agreement states your rights (few) and your obligations (many). It's the real game and wipes out all verbal understandings. The agreement may not fit all business. Three key points to remember:

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