The primary risk threatening modern credit funds is not a market downturn, but operational failure - a crisis often masked by the deceptive familiarity of spreadsheets. This is the Spreadsheet Stockholm Syndrome: the bias causing fund operations to cling to fragile Excel models for mission-critical loan ervicing, portfolio management, and risk modeling. This reliance transforms operational inefficiency into systemic regulatory exposure and unmanaged default risk, directly compromising NAV integrity. For any fund committed to scalable growth and robust governance, the solution requires a dedicated custom Loan Management Platform and the decisive leadership to implement the non-negotiable strategy: Burn the Boats.

1. Loan Servicing and Reconciliation Failure (Direct P&L Leakage)

• The Problem: Floating-rate accruals, fee calculations, capital schedules, and amortization logic are manually maintained across multiple Excel files.
• The Risk: Inaccurate calculations result in direct P&L leaks (over/undercharging interest or fees) or worse, the failure to correctly apply capital and amortization schedules, leading to systemic misstatements of the portfolio's financial standing.

2. Covenant Monitoring Gaps (Avoidable Default Risk)

• The Problem: Borrower covenant metrics - Debt/EBITDA, liquidity ratios, leverage tests - are tracked manually, often across disconnected tabs or files.
• The Result: The system fails to provide real-time covenant breach alerts, delaying crucial action and exposing the fund to avoidable default risk or legal complications.

3. Audit, Compliance, and Governance Failures (The Regulatory Trap)

• The Problem: Excel cannot provide data lineage, version control, or a reliable audit trail for operational changes.
• The Result: Spreadsheets are fundamentally unauditable for these processes, making it impossible to trace who entered a payment override, when, and why it affected the loan status - a non-starter for serious institutional lending.