Two Miles in the Dark and Why the Explosion in Private-Credit Lending Demands Better Gear
Last weekend I went with my son’s Scout troop for a backpacking trip that includes a bike ride on an old rail-trail that plunges into a two-mile, unlit tunnel that is long enough for total darkness to swallow you before the pin-prick of daylight ahead appears.
Inside the tunnel, water drips from the ceiling, the temperature drops a good 10 degrees, and voices echo, all the while you tell yourself, “please don’t let the kids crash.”
As any good Scout knows you should always be prepared, so the ride should include:
- a helmet,
- a decent head-lamp,
- and good brakes…
So we geared up—helmets, lamps, functioning breaks and a granola bar and completed the ride.
Monday-morning epiphany
Back at CIQ HQ, my coworker Chris who is also an avid outdoor enthusiast (he camps out in winter to catch first tracks on the ski hill) compared trail notes with me. He had also Slacked our team Ron Insana’s CNBC segment, “A crisis could be brewing in the world of private credit.” When we mashed that warning with our weekend adventures the light (head-lamp) came on:
Helmet & head-lamp = CovenantIQ.
Riding two miles of darkness without proper gear is exactly what lenders do when they monitor loans with Excel and email threads.
Why the tunnel is the perfect metaphor for today’s market
Trail trouble
New reality in cash flow lending
Hidden potholes
Record fundraising is pushing capital toward borrowers once considered too hard to underwrite or just-south-of-prime.
Longer reaction time
Mid-market lenders are increasing portfolio counts; every new borrower adds more financials to “spread,” monitor, and certify—workload rises at least linearly.
No helmet
PDFs and quarterly covenant checks delay detection; small shocks grow into critical risks before anyone blinks.
Bottom line: When money floods in faster than monitoring can scale, loans start landing with companies that look fine to start but ride straight into pot holes once you ride downhill.
CIQ: Your helmet, head-lamp and good brakes
Chris and I (along with our awesome engineering team) have been building CIQ so lenders can keep up without turning into a 24/7 spreadsheet farm:
- Standardize – borrower financial data is pulled from the accounting system and then mapped and standardized to the CIQ taxonomy
- Calculate – the system takes highly bespoke covenant definitions and turns them into repeatable calculated metrics, making them available as soon as data comes in
- Review and Attest – borrowers can enter additional information like their EBITDA adjustments, review their financials and then attest. Only then is the data available for the lender to review.
A quick laugh… because the business world is not always very funny
- Helmet-free tunnel ride: bold fashion, great TikTok, sad ER visit if you crash.
- Tracking a $100 M portfolio in Excel: same vibe, louder auditors.
- CIQ: the difference between “That was epic!” and “Why is compliance calling?”
I wouldn’t let my Scouts roll into that tunnel without proper gear. Don’t let your loan portfolio do it either.
