Warrant coverage grants the right to purchase additional shares at a fixed exercise price, sized as a percentage of the investment (e.g., 20% coverage on a $1M deal means $200k of warrants). It adds equity upside on top of a loan or investment.
Warrant coverage is especially common in venture debt, compensating lenders for the risk of lending to unprofitable startups. The key terms are the coverage percentage, the strike price, and the exercise window.