The First Funded

The Road to January 2023

The Juan Pollo transaction didn’t arrive from nowhere. It was the product of nine months of systematic, live testing. Real commercial transactions, real borrowers, real stakes. Conducted quietly across industries throughout 2022. These were not simulations. Each deal was a funded loan, with Indigo Commercial Funding running OpenAI’s API directly inside the underwriting workflow.

Starting in April 2022, a series of SBA 504 transactions became the proving ground for what would become Trial 9, the Generative AI trial. Thirteen distinct borrower engagements preceded the historic submission, building confidence in the model, refining the workflow, and establishing the human-in-the-loop review standard that made the final step possible.

The Technology of the Moment

When Trial 1 ran on April 19, 2022, Xtreme Tint, Whittier, California, ChatGPT did not exist. The application that would reach 100 million users faster than any product in history would not launch for another seven months. What Indigo Commercial Funding operated with was something more fundamental: direct programmatic access to GPT-3 through OpenAI’s REST API. A tool available only to developers with an API key and the ability to write code against it.

There was no chat interface. No consumer product. A credit officer constructed text prompts, submitted them to the API as single-turn completions, reviewed every output against source documents, and incorporated approved content into institutional credit memoranda. The human-in-the-loop wasn’t a design philosophy adopted for regulatory optics. It was the only available workflow. And the AI authorship was disclosed, in footnote 1, page 10 of the CAM.

ChatGPT launched November 28, 2022. By that date, ten of the thirteen preceding trial transactions had already closed. Juan Pollo was approved six weeks later. The trials that produced the first AI-funded SBA deal in history were conducted almost entirely before the world discovered what these models could do.

The Transaction

Financial Analysis

The credit package included three years of business tax returns, a 10-month interim financial statement, and a two-year forward projection. The operating company, incorporated in December 2019 after nearly 26 years as a sole proprietorship, showed the classic COVID-19 recovery arc: a 2020 loss, a strong 2021 rebound of 24.2% revenue growth, and a continued trajectory into 2022. The key addback in the cash flow analysis was the elimination of non-recurring rent for the existing location, which the property purchase permanently removed from the debt service calculation.

The Authorization

The SBA Authorization for Debenture Guarantee is the final stamp of approval in the 504 program. Issued by the Sacramento Loan Processing Center after the full credit package has been reviewed. It authorizes the CDC to issue the debenture, specifies all loan terms, and is signed by an authorized SBA representative. For this transaction, that signature came on January 10, 2023.

U.S. Small Business Administration

Authorization for Debenture Guarantee

SBA 504 Loan Program · 504 Wizard 2018 · Santa Ana District Office

Program

SBA 504

Loan Name

Juan Pollo

Approval Date

January 10, 2023

Debenture Amount

$510,000

Debenture Term

25 Years

CDC

AmPac Tri-State CDC

Signed by: Authorized SBA Representative, Sacramento Loan Processing Center · January 10, 2023

Interim & Third Party Lender: Indigo Commercial Funding I, LLC

Source Documents

Following the precedent set by Google’s open-sourcing of “Attention Is All You Need,” the primary source documents for this historic transaction are available on request. The AI disclosure is in footnote 1 of page 10 of the CAM. The SBA Authorization is the final proof of approval.