Nova AI — Credit Reasoning

Bright Horizon Bakery LLC

Maria Santos · Austin, TX · EIN 47-3821654

SBA 7(a) $350,000 84 months · 9.75% Loan ID: NGB-SMB-2026-0142

Analysis triggered by

James Chen · RM Channel

May 21, 2026 · 11:42am

Nova AI · Credit reasoning engine

XGBoost + LLM hybrid · Model version 4.2.1 · Policy set: SBA 7(a) 2026

Initializing…

Pulling financial statements Source 1 of 3

Retrieving 3-year Form 1065 tax returns via IRS TDS API. Extracting 47 line items per year using OCR + structured parser. Cross-checking Schedule K-1 for owner distributions.

3 years extracted · FY2023–2025 · 141 line items · OCR confidence 98.4% · No anomalies flagged

completed in 1.2s

Bank feed analysis — 24 months Source 2 of 3

Connecting to Frost Bank via Plaid. Classifying 1,847 transactions across payroll, COGS, rent, utilities, and revenue deposits. Building cash-flow model from live transaction data.

1,847 transactions classified · Average monthly revenue $85.8K · Payroll stable · Cash-flow vs tax return: 3.1% variance (within tolerance)

completed in 2.8s

DSCR calculation & stress testing Core metric

Computing debt service coverage ratio using proposed P+I of $5,483/month ($65.8K/year). Testing against 3-year income history and running 5 revenue-decline scenarios: −10%, −15%, −20%, −25%, −30%.

DSCR 1.42× (FY2025 basis) · Covenant floor: 1.20× · Headroom: 0.22× · Breaks covenant at −16% revenue decline · Stress test: passes at −15%

completed in 0.4s

Industry benchmark & peer comparison Source 3 of 3

Pulling NAICS 722515 (bakery/café) benchmarks from D&B, Sageworks, and internal portfolio comps. Comparing DSCR, leverage, revenue growth, and PD against 214 similar SMBs in the $500K–$2M revenue band.

DSCR 1.42× = 68th percentile for NAICS 722515 · PD 3.2% vs sector median 5.8% · Revenue growth +15.5% 3yr CAGR vs sector +8.2% · Minor headwind: food-service sector stress index elevated (↑ 12% YoY)

completed in 1.6s

KYC, fraud & EWS signals

Running OFAC/SDN, PEP, and adverse media screens. Checking entity against FinCEN beneficial ownership registry. Pulling D&B Paydex, Yelp/Google review sentiment, and last-12-month EWS trajectory.

OFAC: clear · PEP: clear · D&B Paydex: 74 (good) · EWS score: 22/100 (low risk) · Review sentiment: 4.7★ positive · No synthetic identity flags

completed in 0.9s

Policy compliance check SBA SOP 50 10 7.1

Validating against SBA 7(a) eligibility matrix: business type, size standards, use of proceeds, collateral adequacy, owner FICO threshold, citizenship, and prior SBA default history.

5 of 6 criteria: clear · Collateral: equipment at $142K appraised value covers 40.6% of loan — below 100% preferred but within SBA partial-collateral allowance. Insurance cert pending.

completed in 0.3s

Scoring & recommendation synthesis

Aggregating 23 input variables across 6 dimensions: cash flow (weight 30%), credit history (20%), business viability (20%), collateral (15%), management quality (10%), macro factors (5%). Generating final score and recommendation narrative.

Score: 72/100 · Recommendation: Approve · Confidence: 87% · 2 conditions flagged · Total analysis time: 8.2 seconds

completed in 0.8s · total: 8.2s

/ 100

Nova recommendation

Approve — low–medium risk

Strong DSCR (1.42×), below-median PD (3.2%), clean KYC, and consistent 4-year revenue growth. Two conditions apply: insurance cert required at closing; food-service sector headwind warrants quarterly covenant monitoring for first 12 months.

DSCR 1.42× — passes PD 3.2% — below median KYC — clear Collateral — partial Sector headwind

Model confidence87%

Analysis: 8.2s · 87% confidence

Loan summary

BorrowerBright Horizon Bakery

ProductSBA 7(a)

Amount$350,000

Term84 months

Rate9.75%

Monthly P+I$5,483

CollateralEquipment $142K

Key metrics

DSCR (FY2025)1.42×

DSCR covenant floor1.20×

PD (12-month)3.2%

Owner FICO718

EWS score22 / 100

D&B Paydex74

Revenue growth (3yr)+15.5% CAGR

About this analysis

Nova's credit reasoning is a recommendation, not a decision. Every output is reviewed by a licensed credit officer before any commitment is made.

Model inputs, confidence levels, and all data sources are logged for model risk governance and fair-lending compliance (ECOA / Reg B).

Traditional comparison

Nova analysis time8.2 seconds

Traditional spreading4 hours

Data sources used3 (vs 1 traditional)

Variables analyzed23