A financial ratio test for covenant compliance that needs to be met at regular intervals (such as quarterly or the end of each fiscal quarter). For example, the borrower may be required to maintain a leverage ratio of less than 3.0:1.0. The effect is that the lender has recourse against the borrower if its financial condition deteriorates (unlike incurrence based covenants where the lender has no recourse until a specific action occurs without a financial ratio test being met).

Bank loans traditionally have maintenance covenants. Incurrence based covenants are typical for high-yield bonds. Covenant-lite loans are bank loans that have incurrence based covenants.