Facilitator Guide

Credit Agreements

Facilitator Guide

Credit Agreements

Topic: Commercial Lending
Duration: 1 hr
Format: Remote or in person

What’s covered

Drafting a credit agreement
General loan provisions
Exhibits & schedules
Loan assignment processes
Reps & warranties
Affirmative covenants
Negative covenants
Financial covenants
Covenant-lite loans
Springing covenants
Current Ratio
Interest Coverage Ratio
Fixed Charge Coverage Ratio
Leverage Ratios

Before the session

Prepare the Attendees

Send the attendees an invitation for the session. Include this link, which has the videos and exercise they’ll need to prepare.

https://www.hotshotlegal.com/trainings/credit-agreements/attendee

Prepare Yourself

Watch the videos and read the exercise so you’re familiar with the Hotshot material.

Course

Covenants and Events of Default

A review of covenants and events of default, including affirmative and negative covenants, a detailed look at financial covenants, and the interplay between covenants and events of default. This course also looks at the concepts of “covenant lite” and “springing covenants” as well as the difference between a Default and an Event of Default.
Course

Credit Agreements

The credit agreement is the main agreement in a commercial lending transaction. This course covers the contents of a credit agreement, including a walkthrough of a typical credit agreement.
Exercise
PDF

During the session

Part 1: Knowledge Check

Ask attendees these questions to ensure they understand the topic:

What are some of the different ways that the makeup of the lender group can change over the life of the loan?
What is meant by “Sacred Rights”?
Why do credit agreements have covenants and Events of Default sections?
What are some of the standard affirmative covenants found in most loan agreements? What about the standard negative covenants?
What kinds of exceptions do the parties sometimes negotiate to negative covenants?
What kinds of covenants are typically excluded from covenant-lite loans?
What purpose do financial covenants serve in lending agreements? What are some common financial covenants?
What are some of the more common Events of Default?
When an Event of Default happens, what are some of the lender’s options?
How do Defaults differ from Events of Default?

Part 2: Group Exercise

Lead a group discussion based on the exercise. To encourage collaboration, divide the attendees into groups to discuss the exercise, then have a representative from each group summarize their views to the larger group. Call on people to share their thoughts and ask others to respond.

Tip for remote sessions: use your web conferencing system’s breakout room feature to divide people into groups.

Part 3: War Stories and Firm Specifics

Share your own experiences and guidance, including:

Anecdotes and war stories (e.g., about a near-disaster or a tough negotiation)
General practice tips (dos and don’ts)
Firm-specific guidance and practices

After the session

To continue their learning, attendees can check out related courses in Hotshot’s Commercial Lending topic.

About Hotshot

Hotshot helps lawyers develop their legal, business, and technology skills through short videos, quizzes, and summaries, and we help law firms and law schools plan and deliver engaging training programs. Our customers include Am Law 200 firms, top law schools, and regional and international firms.