How lenders will read your contracts

Questions neoclouds ask

How much can we borrow against our customer contracts?

Lenders project the cash flow under each contract, divide it by a sizing DSCR and cap the result at a percentage of hardware cost or depreciated value. Contracts with investment-grade customers support more debt and lower margins. Try the borrowing base calculator.

Do we need a special purpose vehicle?

Most asset-level GPU facilities lend to an SPV that owns the GPUs and holds the customer contracts, so lenders have a clean claim on the assets and cash. The trade-off is the work of moving contracts into the SPV and running controlled accounts. See novating the customer contract.

Will lenders want a parent guarantee?

It depends on the customer. Deals backed by the strongest customers have needed only a limited bad-acts guarantee, while facilities relying on weaker contracts have carried full parent guarantees. See parent guarantees in GPU loans.

What will our customers be asked to sign?

Usually a direct agreement or consent: acknowledging the lenders' security, paying into a controlled account, and giving the lenders notice and time to cure before terminating. Large customers negotiate these hard, so raise them early in the customer contract. See step-in rights.

Fixed or floating?

Most GPU loans float over SOFR, but fixed-rate tranches and fixed-coupon loans are available, which can suit fixed-price customer contracts. See fixed or floating GPU loans.

When does corporate debt make more sense than asset-level debt?

When the business needs flexible funding across many customers and sites, or before contracts are signed. Convertible notes and high yield bonds have funded growth for several neoclouds, at the cost of dilution or higher coupons. See convertibles and high yield.