What is the main collateral in a GPU-backed loan?

In most public deals the main collateral is the customer contract, not the chips. Lenders take security over the GPUs, but the loan is sized on the contracted cash flow from the offtaker, and the GPUs are a second line of recovery.

Why are GPU loans made to a special purpose vehicle?

A ring-fenced borrower holds only the financed GPUs, the related customer contract and the bank accounts. That lets lenders take security over everything the borrower owns and keeps the asset away from the operator's other creditors.

Do GPU lenders get a parent guarantee?

It varies. Public CoreWeave filings show a full parent guarantee on some facilities and only a limited, bad-acts guarantee on DDTL 4.0, where the offtaker credit was stronger.

Clause explainer

The GPU security package: what lenders take in a GPU-backed loan

What lenders take as security in a GPU-backed loan: the SPV, equity pledge, GPUs, customer contracts, controlled accounts, direct agreements and parent support, with examples from public filings.

Randeep Bubbra | Lawyer | Making the next generation of infrastructure financeableUpdated 23 October 2026Professional profile ↗

a GPU-backed loan is secured on a ring-fenced company that owns the financed GPUs, the customer contract that pays for them and the bank accounts that receive the cash. Lenders take everything that company owns, plus a pledge of its shares, and usually some support from the parent. In practice the customer contract does most of the work; the chips are the fallback.

Why the structure starts with an SPV

Almost every public GPU financing is made to a special purpose vehicle (SPV) rather than to the operating company. CoreWeave's delayed draw term loans each sit in their own borrower (CCAC II for DDTL 1.0, CCAC IV for DDTL 2.0, CCAC VII for DDTL 3.0, CCAC VIII for DDTL 4.0). Nscale's Ward County and North Carolina facilities, and IREN's Hardware 3 financing for its Microsoft contract, follow the same pattern.

The SPV does three jobs. It holds only the financed assets, so lenders can take security over all of it. It keeps those assets away from the operator's other creditors. And it gives the lenders a clean entity to enforce against: if things go wrong, they can sell the shares in the SPV rather than repossess thousands of servers one by one.

The six layers of a typical package

Layer	What it covers	Why it matters
Share pledge	100% of the SPV's equity, granted by its holding company	Lets lenders take over the whole business in one step
All-asset security	GPUs, servers, networking kit and other equipment owned by the SPV	Recovery value if the contract fails
Customer contract	Assignment of the SPV's rights under the master services agreement (MSA) or capacity contract	The cash flow the loan is sized on
Controlled accounts	Collection, liquidity, cash trap and distribution reserve accounts	Lenders see and control the cash before it leaves the SPV
Direct agreements	Consent from the customer (and, where relevant, the data centre landlord) to the security	Without it, the assignment of the contract may be worth little
Parent support	Full guarantee, limited guarantee or bad-acts guarantee from the operator	Covers risks the SPV cannot, such as delivery and fraud

CoreWeave's DDTL 3.0 agreement shows how detailed the account layer gets. "Collateral Accounts" is defined to include an Available Cash Account, an Other Proceeds Account, a Distribution Reserve Account, a Liquidity Account, a Cash Trap Account and each General Account. Each account has its own rules about when money can move, which is how the cash trap and reserve mechanics described in cash sweeps and cash traps actually work.

Nscale's Ward County facility describes its collateral as the equity of the borrower and guarantor and substantially all of their assets, including the infrastructure and the rights under the Microsoft customer contract.

The contract is the real collateral

Lenders take security over the GPUs, but the price of a GPU falls quickly as new generations arrive. That is why public GPU loans are sized on the contracted cash flow, and why pricing tracks the credit of the customer far more closely than the hardware.

CoreWeave's DDTL 2.0 makes the point in its pricing grid. Loans funded against "Specified IG" contracts paid SOFR + 6.00%, investment-grade contracts SOFR + 6.50% and non-investment-grade contracts SOFR + 13.00%. Same borrower, same chips, a 700 basis point gap driven by who was paying. By 2026, single-contract facilities with very strong offtakers priced much tighter: CoreWeave DDTL 4.0 at SOFR + 2.25%, Nscale's Microsoft-backed Ward County facility at SOFR + 2.375%, and IREN's Hardware 3 loan at SOFR + 2.50%.

For a lender, that means the diligence effort goes into the customer contract: term, termination rights, service level credits, acceptance testing, what happens if the GPUs arrive late, and whether the customer can set off claims against payments. These are the same questions an aircraft financier asks about a lease.

Parent support: full, limited or bad acts only

The level of parent support is where public deals differ most.

Full guarantee. CoreWeave's DDTL 5.0 and 5.5 carry a full parent guarantee.
Limited guarantee. IREN's Hardware 3 financing uses limited parent guarantees, one covering obligations under the Microsoft agreement and one covering a remarketing right.
Bad-acts only. CoreWeave's DDTL 4.0, backed by a single strong customer contract, has only a limited (bad-acts) parent guarantee. The lenders rely on the contract and the SPV, and the parent is on the hook only for things like fraud or wrongful diversion of cash.

As a rule of thumb, the stronger and longer the customer contract, the less the lenders need from the parent.

Vendor finance sits alongside

Not all GPU debt is bank or private credit. Equipment manufacturers and their finance arms also fund hardware. Nscale's S-1 includes a global framework agreement with Dell Financial Services, and IREN's Hardware 3 documents include a Dell purchase agreement with non-cancellable, non-returnable terms. Where vendor finance and lender finance sit in the same group, an intercreditor or priority arrangement decides who has first claim on which kit.

What to check in a term sheet

Is the borrower a true SPV, with limits on other debt and other business?
Does the security cover the customer contract, and has the customer signed a direct agreement?
Which accounts are controlled, and who can move money from them?
What does the parent guarantee cover, and when does it fall away?
Where are the GPUs physically located, and does the landlord's lease allow the lender to access and remove them?
How does vendor finance, if any, rank against the loan?

Common questions

Questions clients ask

What is the main collateral in a GPU-backed loan?: In most public deals the main collateral is the customer contract, not the chips. Lenders take security over the GPUs, but the loan is sized on the contracted cash flow from the offtaker, and the GPUs are a second line of recovery.
Why are GPU loans made to a special purpose vehicle?: A ring-fenced borrower holds only the financed GPUs, the related customer contract and the bank accounts. That lets lenders take security over everything the borrower owns and keeps the asset away from the operator's other creditors.
Do GPU lenders get a parent guarantee?: It varies. Public CoreWeave filings show a full parent guarantee on some facilities and only a limited, bad-acts guarantee on DDTL 4.0, where the offtaker credit was stronger.

For in-house counsel

Take it to the documents

The filed wording behind this piece, for the lender’s or the borrower’s side. Previews are open; the full text is free with InfraCompute Weekly.

GPU loan summariesFiled GPU credit agreements side by side: advance rates, covenants and the collateral package.
Financing clause libraryCash traps, coverage ratios, cures, step-in and GPU security, quoted from credit agreements and indentures.
Issues list: GPU credit agreementBuild it from the lender’s or the borrower’s side, with where filed deals land.
The legal desk for in-house counselContract library, issues lists, checklists and English law notes.

Evidence

Sources

Every figure is taken from the public document linked. Links open the filing or release itself.

General information only, drawn from public documents and press reports, which are cited. It is not legal, financial or investment advice. Mention of a company or transaction does not mean the author or any firm acted on it, and nothing here is a view on any company's credit. Views are personal and are not those of any employer or client.