A clause in a facility agreement which provides that a breach of a financial covenant will not be treated as an event of default unless that covenant is breached for a second time. In an even more borrower-friendly version of the clause, an event of default will only occur if the financial covenant is breached on two successive testing dates for that covenant.

The term comes from golf where a mulligan is when a player (in a game not being played in accordance with the official rules) is allowed to retake an exceptionally poor shot, without it being counted as an extra shot.