SBA 7(a) Renewal · $2.1MMatures Aug 15, 2026EWS Watch · 85 days remaining
Reviewing officer
Sarah Jones · Portfolio Manager
May 23, 2026 · 2:14pm
Step 1 — Nova AI initial assessment
High risk
Renewal not recommended — score 41/100
Metro Logistics Partners shows deteriorating financial health across 3 key dimensions. Nova's model recommends declining the renewal at current terms. Full reasoning below.
DSCR 1.26× — down from 1.51× at origination · trajectory negative for 3 consecutive quarters
Model confidence: 71% · XGBoost v4.2 · 2,847 comparable loans in training set
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Step 2 — Sarah's challenge to Nova
SJ
Sarah Jones · Portfolio Manager
2:17pm
"Nova's model is picking up the revenue decline but I don't think it has the full picture. Kevin Rodriguez has been a client for 6 years — zero missed payments. I know from our last call that he locked in two new long-haul contracts in April with Amazon Logistics and H-E-B. Those contracts won't show in the tax return yet but they represent committed revenue. I'm requesting additional information before I accept this recommendation."
Additional information request
Specify what Nova should gather before re-scoring. All requests are logged in the decision audit trail.
Request logged · Model risk governance
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Step 3 — Nova re-analysis with additional information
Nova AI · Re-analysis complete — additional information incorporated
Requested by Sarah Jones · 3 of 3 items retrieved · May 23, 2026 · 2:31pm
Sarah's instinct was correct. The original analysis was missing material forward-looking revenue. Two new long-haul contracts — executed April 8 and April 19, 2026 — represent $684K in committed annual revenue not captured in FY2025 financials. Bank feed confirms the first contract invoices are already clearing (3 deposits totaling $57,200 in May 2026). Revised DSCR with contract-adjusted revenue: 1.38× — above covenant floor.
Executed Apr 19, 2026 · 18-month term · $342,000/yr committed · First invoice cleared May 8 · $22,400
Fleet utilization — some concern remains
Load factor improved to 81% in May (vs 68% Jan–Mar) but diesel cost exposure still elevated. Revenue upside is real; margin recovery will lag 1–2 quarters.
Revised score — contract-adjusted
58/ 100↑ from 41
Revised DSCR: 1.38× (above 1.20× floor) · Contracted revenue reduces risk materially · Sector headwind and leverage ratio remain concerns · Recommend: conditional approval with enhanced covenants
"Nova's revised analysis confirms what I expected. The underlying business is sound — Kevin has never missed a payment in 6 years and these contracts are real. I'm approving the renewal with enhanced covenants: quarterly DSCR monitoring (not annual), a cash reserve requirement, and a net leverage cap. These protect the bank if the margin compression continues. I'm documenting my override rationale below."
Select decision
Approve with conditions
Renew at current terms with additional covenants. Human override of Nova's initial recommendation.
Decline renewal
Accept Nova's original recommendation. Notify client and begin wind-down process.
Additional covenants — required for approval
Quarterly DSCR reporting (vs annual)
DSCR test moved to quarterly · floor remains 1.20× · automatic EWS escalation if DSCR drops below 1.30×
Minimum cash reserve — $120,000
Maintain ≥$120K in deposit account at NextGen at all times · tested monthly via bank feed
Net leverage cap — 4.0× max
Total funded debt / EBITDA ≤ 4.0× · tested annually · breach triggers remediation plan
Contract assignment notice requirement
Client must notify bank within 5 days of any material contract termination (>$100K/yr)
Override logged · Audit trail updated
✅
Renewal approved — human override recorded
Sarah Jones approved the Metro Logistics renewal with 3 enhanced covenants. Nova's initial decline recommendation was overridden based on forward contract documentation. Full decision rationale, model inputs, and override justification are logged in the audit trail.
Approved by Sarah Jones 3 covenants added Override rationale logged Nova score: 58 → conditional
Decision audit trail
Nova AI — Initial assessment
Score 41/100 · High risk · Renewal not recommended · DSCR 1.26×, revenue −8% YoY, leverage 3.8×
May 23, 2026 · 2:14pm · Model v4.2 · Confidence 71%
Renewal terms locked · New covenants written to LOS · James Chen notified · Client notification queued · EWS monitoring updated to quarterly
May 23, 2026 · 2:36pm · Automated
Metro Logistics Partners
Relationship sinceNov 2018 (6yr)
Missed payments0
Current DSCR1.26×
DSCR at origination1.51×
Revenue YoY−8%
Owner FICO724
EWS score38 / 100
Nova initial score41 / 100
Nova revised score58 / 100—
Renewal terms
ProductSBA 7(a)
Current balance$1.92M
Renewal amount$2.1M
MaturityAug 15, 2026
Days remaining85 days
RMJames Chen
AI-first principle
Nova's recommendation is a starting point, not the final word. Sarah's 6-year relationship context — and her knowledge of new contracts not yet in the financial data — is exactly the judgment AI cannot replicate. The human stays in the decision seat. Every override is logged, justified, and auditable.
Governance log
This decision is subject to model risk governance policy MR-2024-07. Override rationale will be reviewed at next quarterly model validation. Fair-lending impact: neutral (no protected class indicators).