Why do banks add covenants to the loan?

why do banks add covenants to the loan?????

Why do banks add covenants to the loan?

Banks add covenants in order to protect their interests in the loan or the collateral. For example, in a home loan, a typical covenant is against %26quot;waste,%26quot; that is, removing valuable fixtures from the property that would reduce the property's value. Technically, a violation of any of the covenants puts the loan into default, even if the payments are on time.