Covenant Waiver Request Letter Template
Three documents and two sheets that lead with the cure plan and draft your relationship manager's own credit committee brief, not just the letter.
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A covenant waiver template is usually one letter: explain what went wrong, ask for relief, hope the relationship carries it. That letter reaches a relationship manager who already trusts the borrower. It then has to survive a credit committee that has never spoken to them, whose job is finding the reason to say no. A plain letter leaves that internal case for the RM to build alone. That gap is the difference between a request that gets a courtesy nod and one a committee prices without the borrower's own input.
Halbrook Precision Tooling, a fictional contract tooling manufacturer, certifies a Total Leverage Ratio of 4.35x against a 4.00x maximum on $23,000,000.00 of funded debt, a breach sized two equivalent ways: $462,644.00 of missing EBITDA, or $1,850,576.00 of debt paydown. Its cure plan projects 3.68x by the next test date. The waiver prices at $178,250.00 all in, and 80.6% of that is a margin step-up most borrowers never model. A real filed waiver agreement paired exactly that structure, a fee plus a step-up, with the covenant that had just been breached.
This is Halbrook's second Total Leverage Ratio breach in eighteen months, and the OCC's own guidance on rating credit risk tells examiners to watch specifically for covenants waived to accommodate a repeat failure. This pack answers that by drafting the Credit Committee Brief the relationship manager actually needs, in the vocabulary that committee already reads, alongside the letter. A facility with a full covenant set beyond this one belongs with the lender reporting package; one with a borrowing base wants the borrowing base certificate pack instead.
What's in the pack
Breach Quantification sheet
The ratio sized two equivalent ways, EBITDA shortfall and debt paydown, plus any prior breach for repeat-breach framing and the waiver's full priced cost, fee and margin step-up together.
Remediation Milestones sheet
Dated, owned, dollar-quantified levers that reconcile to the projected ratio at the next test date, with contractual and automatic levers named separately from ones that depend on execution.
Cure Plan
Each lever's mechanics, owner, and specific risk of slipping, with the effect on the projected ratio if it does. Built from actions already taken, not ones merely hoped for.
Waiver Request Letter
Opens with the dated cure plan in a short table, then the breach in two or three sentences. Names a repeat breach outright rather than waiting for the lender's file to raise it.
Credit Committee Brief
A second document, drafted for the relationship manager to bring to their own committee, in the vocabulary a real credit memo uses: cause, pattern, priced terms, a specific recommendation.
How to use it
- 1
Take it blank, or worked
Download the empty Word and CSV files with no signup, or open the pack in River and hand it the covenant section instead of retyping five files.
- 2
Send the breach first
The covenant section in breach and your own calculation for the period. That builds the Breach Quantification sheet, sized two ways and priced for a likely waiver cost.
- 3
Name what is already committed
A payment on schedule, a financing action already signed, an operating change underway. The Remediation Milestones sheet is built from actions taken, not hoped for.
- 4
Draft both documents
The letter that leads with the plan, and the Credit Committee Brief the relationship manager needs to bring it to their own committee.
Frequently asked questions
Is this template free?
Yes. The whole pack comes down as Word documents and CSV sheets, no signup and no card. Edit with AI is the optional route for anyone who would rather hand River the covenant section than retype five files. The rest of the library is at free templates.
Why draft a document for the bank's own credit committee?
Because the letter is read by a relationship manager who then has to defend the request to people who have never spoken to the borrower. A finished brief in the vocabulary that committee already uses turns the RM's job into editing a draft instead of building a case alone, which is faster for everyone asking for a fast answer.
What if this is a repeat breach, not a first one?
Name it in the letter rather than let the lender's file raise it first. The OCC's guidance on rating credit risk tells examiners to watch for covenants repeatedly waived to accommodate the same failure, so the Credit Committee Brief proposes priced terms for a second breach rather than treating it like the first.
Does the pack compute the waiver's likely cost?
It prices both pieces: an upfront fee and a margin step-up, expressed as an annual dollar figure and totaled over the facility's remaining term. In the worked example the step-up most borrowers never model is 80.6% of the total cost. A real filed waiver agreement pairs exactly this fee-plus-step-up structure with the breached covenant.
Does it tell me whether the bank will grant the waiver?
No. It quantifies the breach, builds a cure plan from real commitments, and drafts both documents a strong ask needs. Whether to grant it, and on what terms, is the lender's own decision, made by people this pack never claims to speak for.
How does this sit next to a full covenant set or a borrowing base?
The lender reporting package is built for the ongoing monthly certificate across a full covenant set, with this kind of breach as one bad month inside it. A facility whose whole relationship is the collateral wants the borrowing base certificate pack instead.
Ask for the waiver with the plan already built
Download the blank pack as Word and CSV files, or open it in River and let the agent build the breach quantification from your own covenant section.
Edit with AI