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AI agent for credit analysts

Covenant Waiver Request Agent

Handle each covenant breach with analysis, a documented proposal and tracking to the next test

DecisionsFinance
See how it worksGet access
Covenant Waiver Request Agent: what goes in, what the agent does and what you get

What it does

A borrower reports a debt service coverage of 1.12 against a 1.20 covenant, and the analyst must decide what to do. This agent starts on a breach by computing the shortfall and checking the cause with the borrower's explanation and statements. It looks at the outlook, such as pending contracts or cost changes, and tests whether the next period will pass. It drafts waiver terms and fees for the committee, including conditions like a reporting increase. It tracks the borrower's response and rechecks at the next test date. If the covenant fails again, it prepares an updated recommendation. The committee approves any waiver. Edge case: a breach caused by a one-time cost is drafted as a waiver; a recurring cause is drafted as an amendment.

How it works

Follow the arrows from top to bottom. The orange dashed arrow is the loop: when a check fails, the agent goes back and tries again.

Start and resultWhat it doesA check on its own workWaits for your OKGoes back and retries
Yes, continueApprovedYes, continueNoNo 1 STARTS WHEN Compliance certificate shows a breach 2 USES A TOOL Compute the shortfall from statements 3 DOES Review the cause and forecast outlook 4 CHECKS THE RESULT Is the cause explained and supported by documents? If not: Request supporting documents from the borrower.Back to step 2. 5 DOES Draft waiver terms, fee and conditions 6 YOU APPROVE Committee approves any waiver 7 USES A TOOL Send the approved terms through the relationshipmanager and track the response 8 USES A TOOL Recheck the covenant at the next test date 9 CHECKS THE RESULT Does the covenant pass at the next test? If not: Prepare an amendment or monitoringrecommendation. Back to step 5. 10 RESULT Waiver file and tracking record
Read the steps as a list
  1. Compliance certificate shows a breach
  2. Compute the shortfall from statements
  3. Review the cause and forecast outlook
  4. Is the cause explained and supported by documents?If not: Request supporting documents from the borrower. Back to step 2.
  5. Draft waiver terms, fee and conditions
  6. Committee approves any waiverThe agent waits here for your OK.
  7. Send the approved terms through the relationship manager and track the response
  8. Recheck the covenant at the next test date
  9. Does the covenant pass at the next test?If not: Prepare an amendment or monitoring recommendation. Back to step 5.
  10. Waiver file and tracking record

How it decides

It recommends a waiver when the breach is explained and the forecast passes. Otherwise it recommends an amendment or closer monitoring.

  • Recommend a waiver for explained one-time breaches
  • Recommend an amendment when the cause is recurring
  • Add reporting conditions for every waiver
  • Apply the fee schedule in the policy

Make it yours

Every agent is a starting point. You choose these settings for your own situation.

  • Fee schedule (default the policy)
  • Conditions list (default added reporting)
  • Retest timing (default next quarter)
  • Committee template (default the bank's form)

What keeps you in control

It always asks you first

  • Committee approves any waiver or amendment

Hard limits

  • Never grant a waiver
  • Never contact a borrower without the relationship manager
  • Document every step

It stops when

  • Done: Waiver or amendment signed and covenant passes
  • Stop: Borrower disputes the breach, so hand to the relationship manager and legal

Set it up

We guide you through the set-up, step by step

Members get the full set-up guide for this agent. No technical skills needed: you copy, paste and upload.

10 minto set it up in your AI
5 AIsChatGPT, Claude, Copilot, Gemini, Grok
  • One set of instructions to paste into your AI, with the clicks for ChatGPT, Claude, Microsoft 365 Copilot, Gemini and Grok
  • The agent then walks you through connecting your own data, one source at a time
  • A downloadable copy with the flow chart, the rules and the full guide
Get access to this agent

An example run

What happensCoverage is 1.12 against 1.20. The borrower blames a one-time $85,000 repair. The agent finds invoices that support $70,000 only. After the borrower adds the rest, the forecast shows 1.26 next quarter. It drafts a waiver with a 0.25 percent fee and quarterly reporting. The committee approves. At the next test coverage is 1.24, passing.

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