Legal Term
loan covenant default cure period small business
Legal Definition
In small business lending, the loan covenant default cure period is the specified timeframe after a lender's notice of covenant violation during which the borrower may remedy the default without triggering immediate loan acceleration or foreclosure, as outlined in the loan agreement.
In Plain English
The extra time a small business gets to fix a mistake in its loan terms, like missing a payment or breaking a rule, before the lender can demand full repayment or take other serious actions.
Example in a Contract
Section 7.01 Cure Period. If the Borrower fails to comply with any covenant set forth in this Agreement, the Lender shall deliver written notice of such default. The Borrower shall have thirty (30) days from the date of such notice to cure the default. If not cured within this period, the Lender may, at its sole discretion, declare the entire loan balance immediately due and payable, and exercise any other remedies available under law or this Agreement.
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