2 min read
Definition
A negative pledge is a covenant in which the borrower agrees not to create any new charge over its assets in favour of another lender without the current lender’s permission.
In plain terms
Even without holding a charge itself, a lender can use a negative pledge to stop you borrowing secured money elsewhere — protecting its unsecured position.
Why it matters for your company
A negative pledge can block or slow a future refinance. Check for one before assuming an asset is free to pledge. See restrictive covenants.
Related reading
Covenant
A covenant is a promise or condition written into a loan agreement that the borrower must keep to for the…
Read →
Deed of priority
A deed of priority is a contract between lenders that fixes who ranks first over shared security — the…
Read →Restrictive covenant (finance)
A restrictive (negative) covenant limits what you can do while a loan is outstanding — extra borrowing,…
Read →Security
In lending, security is an asset or legal claim a lender can enforce to recover its money if a borrower…
Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.