Purchasing Guides / Loan Covenant Compliance Checks

Loan Covenant Compliance Checks

A purchasing guide to buying a workflow that reads borrower reporting packages, recalculates the covenant tests in each loan agreement and lists passes, breaches and open questions for your credit team.

Yearly running cost

Assuming 960 packages a year

By hand: $79.2K / year; 1,440 hours of work
Subscription: $1.2K+ / year
This workflow: $244 / year; Machine usage only; setup, hosting and review are extra.

Where should the reporting packages come from?

Recalculate each loan's covenant tests from the borrower's statements and compare them with the compliance certificate. Review the breaches and open questions instead of spreading every package by hand.

Maximum document size: 120 pages per package.

Check uploaded reporting packagesStatements and certificates, with a review queue$1,512 – 3,960 setupConnect to my loan recordsRepeat checks with reporting due dates$2,376 – 6,360 setup

Your credit officer decides every breach, waiver and rating. No borrower notices, loan changes, lending or investment decisions.

What is included

Read agreed statement and certificate formats, extract the financial inputs each covenant needs, recalculate the tests and return pass, possible breach and open-question results with page references.

Start with the covenant definitions your credit officers approve for each loan, example reporting packages and checked outcomes. The connected option reads loan records and reporting due dates; it does not change ratings, waive covenants or contact borrowers.

How reliable should the covenant checks be?

A correct-looking ratio is not enough. Choose how accurately inputs must be read, how often covenant results must be right and which breaches it must catch.

StandardAccurate tests, with unclear inputs held for review.Financial inputs correct: ≥98%Covenant results correct: ≥98%IncludedStrictMore tests on restated, adjusted and hard-to-read packages.Financial inputs correct: ≥99.5%Covenant results correct: ≥99.5%Setup +$360 – 1,200My own targetsAgree your own acceptance requirements with the provider.Quote separately

How these standards are measured

Test on held-out reporting packages from borrowers and periods not used for tuning. Measure financial inputs, covenant results and breaches found separately. Restated, missing, inconsistent and hard-to-read statements must stay visible; missing output is a failure.

Targets for your selected standard
What is checked	Target
Financial inputs correctAn input passes only when value, period, currency and scale are correct; an input marked missing when it is missing is correct.	≥98%
Covenant results correctA test passes only when the recalculated value and the pass or breach result match the credit officer's label.	≥98%
Breaches caughtBreaches flagged or held for review divided by all labelled breaches; missing results count as misses.	≥98%
Complete source linksResults must keep the statement page, compliance certificate line, covenant definition version and calculation steps.	≥100%

Calculate covenants with exact arithmetic from the definitions your credit officers approve. A model reading of the credit agreement is not a covenant definition, and a recalculated result is not a credit decision.

How quickly should a package be checked?

Choose how quickly each reporting package should be ready for review. Your credit officer's assessment is separate.

Within 10 minutesIncludedWithin 5 minutesSetup +$144 – 480Within 2 minutesSetup +$288 – 840

Timing details

Time from receiving a complete package to stored covenant results, including reading statements, calculations, certificate comparison, queueing and retries. Confirm package size and hardware with your provider.

The target applies to at least 95% of agreed test runs, with 2 in progress at a time.

How much do you want to spend per package?

Choose the machine budget for reading a package and checking its covenants. Tighter budgets may use smaller models or fewer checks.

Up to $1.50IncludedUp to $0.90Setup +$72 – 360Up to $0.60Setup +$216 – 600

Cost details

Includes model calls, retries and shared hosting allocation. Credit review, loan systems, document storage and the calling agent are separate. Failed and repeated runs also consume resources.

Reference machine cost: $0.50 – 1.00 per package at 80 packages a month. The selected cap is a target to test, not a replacement for this estimate.

Reference workload: 40 pages per package.

Where do you want it to run?

Keep borrower documents and loan terms in your cloud or on your own server. Choose whether statement pages may go to an approved AI service.

Run it onAI model access

Data and access details

Runs in a cloud account you control, with access controls and logs.

Only approved statement pages and covenant fields go to the selected external model. Agree access and retention first.

Use read-only access to loan records and limit borrower data to what each check needs. No external calls uses uploaded files and private inference; it cannot use the connected loan-record option.

How do you want to use it?

Use a review page, your current AI agent or a dedicated covenant agent. You can choose more than one.

A review web pageUpload reporting packages, review covenant tests and export the results.IncludedMy existing AI agentAsk your agent to submit a package and retrieve covenant results and open questions.Setup +$72 – 240A dedicated agentUse a dedicated agent to run covenant checks and explain each result.Setup +$144 – 480

Anything else your provider should know?

Optional. Your choices are included automatically.

Packages per monthYour setup budget (USD)

Your covenants, borrower reporting or loan system

Common questions

Do I need this if my loan system already tracks covenants?

Not necessarily. Keep the loan system if it already records inputs and tests. Buy a workflow when analysts still read statements and certificates by hand to fill it in.

Who decides whether a covenant is breached?

Your credit officer. The workflow recalculates the tests and shows its evidence; breach treatment, waivers and ratings stay in your credit process.

Can it read the covenant definitions from the credit agreement?

It can draft them for review. The definitions it checks against are the ones your credit officer approves, recorded with a version.

Can it contact borrowers about missing items?

No. It can list missing items and draft questions. Your team decides what to send.

Can I run it without an external AI service?

Yes, with uploaded files. Choose private processing and supply your own hardware. Measure model quality and running cost during the pilot.