2 min read
Definition
A margin ratchet ties your margin to performance covenants such as gearing or interest cover. Hit better ratios and the margin steps down; slip and it steps up. It aligns the rate with risk over the life of the loan and can genuinely cut costs as you grow.
In plain terms
Perform well and your rate falls automatically; weaken and it rises. It turns good financial management into a lower interest bill.
Why it matters for your company
On a ratchet, keep your ratios strong to earn the lower margin tiers. See credit margin and interest coverage ratio.
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Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.