Covenant calculator
Test a borrower’s DSCR, interest cover and net leverage against the covenant levels in the term sheet. See the headroom on each, how far earnings or cash flow can fall before a breach, and which covenants belong on the watchlist.
1. Borrower numbers for the test period
Use the same unit throughout (for example ₹ crore, last twelve months). Everything is calculated in your browser; nothing is sent to us.
2. Covenant levels from the term sheet
3. Results
A self-check using standard ratio formulas. Loan agreements define each term (for example EBITDA adjustments, cash available for debt service, and which debt counts), so follow your own documents. Not financial or legal advice.
One test is easy. Every borrower, every quarter, is the hard part
The maths takes a minute. What slips is everything around it: chasing borrower numbers before each test date, keeping the workings, noticing that headroom has narrowed two quarters running, and recording who approved a waiver and why.
Averoic runs covenant monitoring as configured workflows: borrower reporting requests and reminders, covenant tests with the workings kept, watchlists and escalations, and maker-checker on waivers, all on a tamper-evident audit trail.
Frequently asked questions
What is DSCR in a loan covenant?
The debt service coverage ratio compares the cash a borrower has available to service debt with the interest and scheduled principal it must pay in the period. A minimum DSCR covenant requires this ratio to stay at or above an agreed level. The loan agreement defines exactly what counts as cash available for debt service.
What is covenant headroom?
Headroom is how far the borrower’s actual ratio is from the covenant level. For a minimum covenant it is (actual − covenant) ÷ covenant; for a maximum covenant such as leverage it is (covenant − actual) ÷ covenant. Shrinking headroom is an early-warning sign even before a breach.
How often should covenants be tested in a private credit portfolio?
At least as often as the loan agreement requires the borrower to report, usually monthly or quarterly, with the test run as soon as the numbers arrive and reminders when they are late.
What covenant levels should I use?
Use the levels in your own term sheet and loan agreement. They vary by lender, sector and deal structure, so the numbers pre-filled in this calculator are only an example.
Is this calculator financial or legal advice?
No. It is a self-check using standard ratio formulas. Your loan documents decide the definitions and adjustments, and your credit policy decides the action.
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