Why hardware-enabled credit needs a different framework.
Hardware, software, and capital operate on fundamentally different timelines — what we call the Three Clocks. Hardware ages over months to years. Software updates weekly to monthly. Capital deploys immediately but expects revenue that depends on both staying in sync. When these clocks fall out of alignment, the operational risk to a credit facility can be material — and invisible to conventional diligence.
Hardware Clock
Months → Years
Design → Build → Deploy → Degrade. Physical assets age on their own timeline. Reliability data accumulates slowly. Novel hardware has no established secondary market — lenders cannot rely on liquidation-based recovery.
Software Clock
Weeks → Months
Update → Patch → Deprecate → Migrate. Code evolves faster than escrow can follow. Third-party APIs change without notice. In default, escrowed code cannot reproduce the production environment.
Capital Clock
Quarters → Years
Draw → Deploy → Revenue → Service. Capital draws immediately. Revenue ramps over months. Seasonal patterns create DSCR stress. Revenue models often assume hardware uptime that hasn't been validated.
Six dimensions. 111 scored factors.
The SOMA framework assesses operational risk across six dimensions, each comprising a defined set of scored factors evaluated through structured evidence review.
Hardware & Manufacturing
- Manufacturing readiness
- Supply chain integrity
- Residual value assessment
- Deployment readiness
- Fleet management capability
Software & Architecture
- Code quality and architecture
- Technical debt assessment
- Dependency management
- Third-party API risk
- Escrow completeness and currency
Deployment & Field Operations
- Operational deployment capability
- Servicing infrastructure
- Fleet management systems
- Geographic distribution risk
- Maintenance capacity vs. deployment pace
Contractual & Commercial
- Contract financeability
- Commercial terms alignment
- Customer concentration
- Revenue model sustainability
- Service contract coverage
Escrow & Continuity
- Escrow completeness and reproducibility
- Backup servicing plans
- Key person dependencies
- Documentation currency
- Crisis activation readiness
Financial & Operational
- Financial performance metrics
- Operational KPI alignment
- DSCR sensitivity
- Covenant design appropriateness
- Monitoring trigger design
Six instruments. Each producing specific credit outputs.
Each SOMA instrument targets a distinct aspect of the hardware-software-capital risk profile and produces a defined output for the credit team.
Integration Risk Map
36-factor (6 per dimension) assessment mapping the integration risk profile of the facility. Identifies where hardware and software dependencies create credit risk.
Technical Continuity Score
Composite credit metric — the primary scored output. Maps to advance rate bands (A through F). Designed to sit alongside financial credit metrics in an IC paper.
Contract Financeability Score
Per-contract eligibility assessment. Evaluates whether the contractual structure supports the financing — revenue model, service terms, termination provisions.
Manufacturing & Deployment Readiness Assessment
24 gate assessment (12 in MVP) covering hardware manufacturing readiness, supply chain integrity, and operational deployment capability.
Operational Telemetry Triggers & Monitoring
Multi-factor, multi-severity monitoring framework. Compound trigger detection. Designed to surface operational stress 30–90 days before it appears in financial statements.
Continuity & Step-In Playbook
Scenario-based protocols defining who maintains hardware and software operations in a default, workout, or key-person loss event. Activated by OTTM triggers.
TCS ratings map directly to advance rate guidance.
The Technical Continuity Score is the primary output of a SOMA assessment. It provides the investment committee with a scored, grade-based risk assessment that maps directly to advance rate guidance and monitoring requirements.
| Rating | Description | Advance Rate Guidance | Monitoring Tier |
|---|---|---|---|
| A | Exceptional operational continuity and integration rigour | Up to 80% | Standard |
| B | Strong fundamentals with identified and manageable risks | Up to 75% | Standard |
| C | Adequate with conditions — specific mitigants required | Up to 65% | Enhanced |
| D | Material operational risk — significant conditions or restructuring needed | Up to 55% | Intensive |
| F | Unacceptable operational risk profile at current structure | Decline | N/A |
Two assessment scopes. Both credit-committee grade.
The SOMA MVP is designed for deals where speed is paramount. It applies 63 of the 111 factors with no reduction in Clock Synchronisation rigour — delivering a full credit-committee report in 3–5 days.
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A 2–3 page methodology summary is available on request. It covers the framework architecture, instrument descriptions, and sample output structure.
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