How lenders assess GPU financing

GPU hardware loses value quickly, so lenders treat it as the second line of defence. The first is the cash flow from customer contracts. If those contracts are strong, the loan can be repaid even if the hardware is worth less than expected.

That is why the first questions are always about the customer: who pays, for how long, and how sure is it.

Customer quality. An investment grade or large profitable customer weighs far more than a young company with no track record.

Contract strength. Take-or-pay, where the customer pays whether it uses the capacity or not, is stronger than usage-based pricing. A contract the customer can end at will is weak security.

Term against loan. The contract should run at least as long as the loan, and the loan should be repaid in instalments within that time. Otherwise repayment depends on renewing the contract or on resale value.

Concentration. One customer making up most of the revenue is a risk lenders flag first.

Cover. Revenue after operating costs should comfortably exceed interest and instalments.

Lenders estimate what the hardware could be sold for in an orderly sale, and lend a share of that. Newer generations push down the value of older ones, so long loans are treated with caution and a large balloon payment at the end is often refused.

The hardware and contracts sit in a separate company, which borrows against them. The sponsor puts in equity, often a fifth to a third of the cost. Money is typically paid out against delivery of the hardware, not before.

No signed customer, or a contract shorter than the loan.

A single customer making up most of the revenue.

Little or no equity from the sponsor.

Old, mixed or consumer-grade hardware.

Unclear ownership or missing identity checks on the owners.

Revenue figures that do not match actual usage data.

We help you present the project in the form lenders expect, and introduce lenders whose criteria fit. We are not a lender, and the credit decision is always the lender's.