You are reading the undertakings section of your term sheet. One of the conditions is the Reporting requirement covenant. Here is what it controls, why the bank includes it, and what to check before you sign.
What the bank is measuring
Reporting requirements specify the financial statements and certificates the borrower must deliver to the lender, including format, content, and deadlines.
What this means: Creates ongoing administrative burden. May require upgrading accounting systems, hiring finance staff, or engaging external accountants to meet deadlines.
What to check
Deadlines: typically 30–90 days after period end — quarterly reporting is common
Audit requirement: annual audited statements are often required even if not otherwise mandatory
Compliance certificate: a director or CFO must formally certify covenant compliance — personal liability
How to negotiate
Most covenant terms are negotiable at the term sheet stage, before the legal documentation is drawn up. With the Reporting requirement covenant, focus on the definition, the threshold, the testing frequency, and the cure period. Ask your relationship manager what flexibility exists, and have your accountant confirm the level is one your business can hold comfortably. Read every line.
What to do next
The fastest way to see whether a Reporting requirement covenant — and every other condition — is in your term sheet is to let Credia read it for you. Upload the PDF and you get every covenant identified and explained, in plain language, in under two minutes.
Analyse your term sheetFrequently asked questions
What is a Reporting requirement covenant?
Reporting requirements specify the financial statements and certificates the borrower must deliver to the lender, including format, content, and deadlines.
What does a Reporting requirement covenant restrict?
Creates ongoing administrative burden. May require upgrading accounting systems, hiring finance staff, or engaging external accountants to meet deadlines.
Can you negotiate a Reporting requirement covenant?
Most covenant terms are negotiable at the term sheet stage, before the legal documentation is drawn up. With the Reporting requirement covenant, focus on the definition, the threshold, the testing frequency, and the cure period. Ask your relationship manager what flexibility exists, and have your accountant confirm the level is one your business can hold comfortably. Read every line.