Independent Engineer and LTA Reports for GPU Financing
What to check before you fund.
What it covers
An independent engineer, also called the lender's technical advisor (LTA), reviews a financed project for the lenders: build, power, schedule and budget before close, then drawdowns, acceptance tests and covenants. On a GPU loan the collateral is the servers, with GPUs about 77% of a cluster's bill of materials, and a building-focused report rarely prices them or tests them against the site and the offtake contract.
What you should check for
| Before close | Scope covers the equipment | The engagement names the servers, network and cooling being financed, or the lender adds an equipment review beside it. |
| One schedule for power and hardware | Energization in writing, with the hardware allocation, the colo's power date and the offtaker's ready-for-service date in one schedule. | |
| Budget split by collateral | Equipment priced apart from installation, support and freight, which are not collateral. | |
| Drawdowns | Draws tied to delivered equipment | Each draw released against servers received and installed, matched by serial number to the invoice and the UCC-1 schedule. BOMs can change right up until delivery. |
| Draws sized to batches | A delayed draw term loan funds each batch of servers as it arrives and is installed. | |
| Acceptance | Burn-in under load | Servers run at sustained full load, typically for 24-72 hours, with the serials tested listed in the results. |
| The offtaker's acceptance test | Defined before the ready-for-service date, with testing time in the schedule. | |
| Witnessed and signed | A named party witnesses the tests and signs the results, so the lender is not relying on the borrower's own report. | |
| After close | Values against the LTV covenant | A quarterly appraisal of the financed model against the covenant. ASIC prices crossed mining loan covenants within months in 2022. |
| Serials and liens | GPU serials still match the UCC-1 schedule, and no new UCC-1 filings by other creditors. | |
| The host's health | Uptime against the SLA, and no unpaid power or colocation bills at the site. |
Sources: American Compute.
What the independent engineer does
The independent engineer works for the lender group. The usual scope runs in stages: a report before close, monitoring through the build with a sign-off on each drawdown, witnessing the completion and acceptance tests, and reporting against the covenants after close.
On a data center build that scope centers on the building, covering the site, the power and cooling plant, the construction schedule and budget, and the contractors. GPU financings often fund servers into a facility someone else built, on a schedule set by hardware deliveries and the offtaker's ready-for-service date. Over a third of the 110 data center projects due in 2025 missed their dates.
Where a building report stops
The questions that decide a GPU loan sit in the equipment and the offtake contract. A standard report seldom answers them, and they are where an appraisal and technical due diligence fit beside the engineer's report.
- Price against the market
- The same B300 server has been quoted at both $460,000 and $550,000.
- Collateral values over the term
- Fair market, orderly and forced liquidation values, and residuals at key dates. A B300 falls from about 80% of list price to 52-64% in a year in our conservative case.
- Refresh costs
- For operating fleets, the cost and timing of the next refresh against the remaining term.
- Density and cooling against the site
- GB300 NVL72 racks draw up to 140 kW, and past roughly 40 kW per rack air cooling stops working.
- Uptime against the offtake contract
- Uptime Tier I and II sites allow 23-29 hours of downtime a year, Tier III about 1.6.
Red flags
| Report scoped to the building only | It signs off the shell and the plant and never prices the servers. On one quote we reviewed, the GPU board was 2.8x market. |
| Draws released against the quote | BOMs can change right up until delivery, so a draw on the quote can fund a configuration that never arrives. |
| Acceptance test the offtaker never agreed | A missed deployment date is typically a breach with a 30-45 day cure, after which the offtaker can terminate. |
| No equipment monitoring after close | Miner prices fell 85% in 2022, and a loan sized at 70% of early-2022 prices was under water by year end. |
Discuss a transaction
Send us the equipment list and the loan or lease you have in mind. We will come back with an indication and the questions we would need answered.
Prefer email? hello@amcompute.com