Sample Covenants Banking Letters

Request Relaxation of Covenants in Credit Terms

 

[DATE, ex. Monday, November 28, 2011]

 

 

[NAME, BANK AND ADDRESS, ex.

Danny Graham

ABC Bank

123 Lane

Area 456

City, State, Pin Code]

 

Dear [NAME, ex. Mr. Graham],

 

As per the terms and conditions of our credit arrangement with you, we are required to maintain [STATE COVENANT WHICH YOU EXPECT TO BREAK, ex. a debt to equity ratio of 2 to 1].

 

[EXPLAIN REASONS FOR RELAXING OF COVENANT, ex. As you know, our business is seasonal, and this year, we are luckily experiencing record orders for our products. Although this is desirable from a sales and profitability perspective, though it requires additional capital to finance the growth, and we have raised this amount privately by way of debt].

 

We expect to be back in a position to maintain our covenants within a few months.

 

Thank you in advance for your anticipated co-operation.

For any queries, please feel free to contact me directly.

Yours faithfully,

[Your Name, ex. Mark Anthony]

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