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Direct Lending simplified: automate, track, and mitigate risks

Direct Lending presents unique challenges in loan origination, borrower management, and collateral evaluation. Cardo AI tackles these challenges by providing specialized solutions that boost operational efficiency and empower strategic decision-making.

What’s in it for you?

  • Streamlined operations: Simplify and accelerate loan processing from origination to servicing with automated workflows and real-time data integration.
  • Customized risk management: Tailor risk assessment models to fit diverse borrower profiles and lending scenarios, ensuring robust risk mitigation strategies.
  • Enhanced portfolio insights: Gain deep insights into portfolio performance and asset quality through advanced analytics, empowering proactive portfolio management.
  • Scalable solutions: Scale operations seamlessly with flexible, scalable technology that adapts to evolving regulatory requirements and market conditions.
  • Investor confidence: Boost investor confidence with transparent reporting and comprehensive performance metrics, showcasing adherence to covenants and strategic alignment.

Why does it matter?

There are several issues linked to Direct Lending activities:

  • Customized loan structures: Direct Lending involves creating highly customized loan agreements tailored to the specific needs of each borrower. This means having, among others, flexible repayment schedules, varied interest rates, and specific covenants to protect the investment.
  • Credit risk assessment: Direct Lending requires solid credit risk assessment as loans are often unsecured or secured by non-traditional collateral. Therefore it is necessary to continuously monitor loan performance to detect early signs of distress and ensure timely repayments.
  • Strict covenants to safeguard lenders’ interests, often encompassing financial ratios, performance metrics, and activity restrictions.
  • Borrowing base in Direct Lending involves determining eligible collateral, accurately valuing it, setting advance rates, and continuously monitoring and adjusting the collateral to ensure compliance with loan agreements, thereby mitigating risk and maintaining lending capacity.
  • Legal and compliance issues: Direct Lending must also adhere to regulatory requirements, which can vary significantly depending on the jurisdiction and type of borrower.

How does it work?

Our Direct Lending solution offers the following features:

  • Customize your loans with our facility module: Adapt loan settings to your specific requirements and configure different loan types effortlessly in a flexible environment; automatically calculate expected payments, interest accruals, and set detailed loan terms and conditions.
  • Ensure accurate loan origination with our borrowing base: Easily verify eligibility and concentration limits, ensuring the correct application of advance rates for each loan. This maintains accurate and compliant lending practices.
  • Track borrower performance easily with borrower monitoring: Standardize financial data from borrowers and gain valuable insights into their behavior and financial health. This facilitates informed lending decisions and enhances risk management.
  • Manage loan covenants with covenants tracking: Conduct automated compliance checks for precise monitoring of financial and operational covenants. Receive early warnings for potential breaches, allowing borrowers to address issues promptly.
  • Efficiently manage collateral with collateral management: Monitor all collateral assets, perform regular valuations, and ensure compliance with collateral eligibility criteria. This helps maintain accurate collateral values and mitigate risks from fluctuating asset values.
  • Stay organized with transaction events: Keep track of all loan-related events in one centralized location. Stay informed about upcoming borrower obligations and easily sync transaction events with your calendar for better organization and efficiency.

Use Case

Our client, a leading European asset manager, launched a diversified corporate credit fund focused on development of Italian SME and Mid-Cap with ESG targets. The Asset Manager, who raised money from high-standing European institutional investors,, recognized that managing the financial and operational aspects of loans using Excel would have posed significant challenges, such as:

  • Complexity in data management: Managing a diverse portfolio of loans in Excel is difficult and prone to errors, especially as data volume increases.
  • Lack of automation: Manual calculations for accruals is time-consuming and open to operational risks.
  • Poor scalability: As the fund grows, traditional software like Excel struggles to handle the increased data load and complexity, affecting decision-making speed and accuracy.
  • Limited collaboration: Excel’s limitations in real-time data sharing and collaboration can hinder effective communication and coordination among team members.
  • Risk management: operational risk and compliance with investor mandate imposing strict controls on borrowers’ financial and ESG performance require solid processes and tools. 

Recognizing these limitations, the Asset Manager chose Cardo AI Direct Lending advanced software to enhance its operations. Our solution enables efficient management and monitoring of loan details and collateral data. With our software, the client can now digitize the entire loan management process. This transition from Excel to a centralized, automated system has greatly improved operational efficiency and strategic decision-making.

Ready to gain deeper insights into our Direct Lending solution? Request a demo here to see the tool in action.