Every covenant tested when the borrower's reporting arrives, rather than when someone finds the time.
Bluegrass builds portfolio monitoring systems for commercial and CRE lenders, banks, credit unions and private credit funds. They read what borrowers report, test each covenant as the agreement defines it and draft the annual review for your relationship and credit teams.
Monitoring is where a portfolio's risk shows up first, yet it is often deferred, because every borrower reports in its own format and every agreement defines its covenants differently.
What portfolio monitoring involves today
After closing, borrowers owe periodic financial statements and compliance certificates, plus borrowing base certificates for asset-based loans. Someone has to chase what is late and recalculate each covenant under the agreement's definitions, which often differ from the borrower's arithmetic.
Portfolio managers carry dozens or hundreds of relationships, so testing slips and a breach is found a quarter late. Because the agreement defines each test and the documents supply each figure, AI can do the testing while people judge the results.
How automated covenant monitoring works
- 01
Abstract the agreement
Each agreement and its amendments are read for the financial covenants and their definitions, reporting deadlines and cure provisions, and a person confirms the abstract once.
- 02
Track what is due
Reporting deadlines are tracked for every borrower, and anything overdue is raised with a reminder drafted for the relationship manager to send.
- 03
Read what arrives
Financial statements, compliance certificates, borrowing base certificates, agings, rent rolls and operating statements are read and spread, with every figure linked to its page.
- 04
Test the covenants
Each covenant is recalculated under the agreement's definitions and compared with the borrower's own certificate, and any breach, narrow pass or discrepancy is raised with the calculation shown.
- 05
Draft the review
Quarterly and annual reviews are drafted from the spreads, test results and relationship history for the relationship manager and credit officer to edit and approve.
Where people stay in the loop
Decisions on a breach, waiver, amendment or change in risk rating stay with your relationship managers, credit officers and committees; the system neither rates borrowers nor predicts default. Its tests are first checked against your team's past results.
The systems it works with
The system works with your servicing and origination systems, borrower portal or inbox, spreading template and tickler, and records every test and review in the loan file.
When to build it, and when to buy it
Loan origination and portfolio management platforms include tickler and covenant tracking, and if your agreements are standard and borrowers report through a portal, those modules may be enough.
A custom build makes sense when agreements are negotiated loan by loan, as in middle-market, asset-based and private credit lending, or when spreading, monitoring and annual reviews should share one reading rather than three tools.
We hold no reseller agreements, partner quotas or revenue share with any vendor, so a recommendation to buy is made on its merits.
What this work costs you today
A quick way to put a number on the problem before talking to anyone, using your own figures rather than ours.
Enter your volume and the minutes each one takes to see what the work costs in a year.
The numbers stay in your browser and are not stored or sent anywhere. Bring the figure to the first call, since it is the baseline any system should be measured against.
Questions about covenant and portfolio monitoring
- Can it follow each agreement's own definitions?
- Definitions such as EBITDA, fixed charges and eligible receivables are abstracted from each agreement and its amendments and applied as written, once a person has confirmed the abstract.
- Does it work for asset-based loans?
- It reads borrowing base certificates with their agings and inventory reports and recalculates availability under the agreement's eligibility criteria and advance rates. Any difference from the borrower's figures goes to your collateral team.
- Does it work for private credit funds?
- Direct lenders and credit funds face the same work with quarterly packages, and the system can also draft the quarterly portfolio review in the fund's own format.
Related systems
A senior team that has done this before
We are a small, entirely senior team with fifty years of combined AI engineering, multiple granted patents and Y Combinator founders, from Yale, MIT, McKinsey, Goldman Sachs, Microsoft and Vista Equity Partners. The people who scope your work are the people who write the code.
Selected work
We built the AI transformation roadmap for a top-50 P&C brokerage, and it is saving the firm millions of dollars in vendor fees it did not need to pay.
Clients include some of the largest banks, RIAs, fintechs and AI labs, as well as a top-3 P&C carrier, a top-10 P&C brokerage, a top-5 trucking brokerage, a leading specialty MGA and a leading trucking MGA.
We run only 3 to 5 engagements at a time, so that every client works directly with the senior team.
About the team- Dozens
- of insurance companies, RIAs, banks and fintechs we have worked with
- 50 yrs
- combined AI engineering experience
- 10+ Patents
- granted to members of the team
- 100%
- of the IP we build is assigned to you
Find out whether this is worth building for your business.
A 30-minute call with an engineer usually shows whether this is worth building. Within a week you will have a free written point of view, including whether a packaged product would serve you better.