Direct lending typically involves 'senior loans'

Direct lending is the most common form of private credit

Other types include opportunistic credit, special-situations credit, mezzanine finance, venture debt, infrastructure debt, real estate debt, and more. All of these sources of capital technically create private transactions, so they can all call themselves private credit.

Private credit is a nonbank loan made directly to a business

Similar to private equity, private credit is part of the private markets world. Both strategies offer illiquid, privately negotiated investments for privately held companies. Unlike private equity investors, however, private credit investors typically do not take ownership stakes in the companies they invest in.

Before the modern banking system, most lending resembled private credit

Before the creation of the modern banking system, the majority of loans were negotiated directly between the lender and the borrower—effectively making them private credit transactions.

Borrowers were increasingly defaulting on private credit loans as of early 2026

Risks in private credit investing include the industry's lack of transparency and the ability of businesses to borrow more than a bank might allow against their debt. Some borrowers in early 2026, for instance, likely did not expect interest rates to be so high for so long, which could be contributing to an uptick in defaults.

Securitization has become common practice in home financing

When a homebuyer finances with a lender, they aren’t necessarily the one footing the bill. After a buyer secures a home loan, the lender can sell the loan to another financial institution or a private institution. That group can later sell that mortgage to investors. This is called securitization.

A direct listing is when a company goes public, listing shares on a stock exchange

A direct listing is when a company goes public, listing its shares on a stock exchange, rather than issuing new shares or raising capital. That means investment banks—traditionally serving as intermediaries—could lose out on some of the profits from these deals as more companies like Spotify opt for direct listings.

Private equity firms often use leveraged buyouts to acquire new companies

In a leveraged buyout or "LBO," private equity funds finance acquisitions with debt secured by the target company's assets and cash flows. The PE firm aims to improve operations and leverage the company's profile to pay down debt, thereby increasing equity value.

Since the 1990s, banks have sold some of the credit risk of their accounts to external investors, known as SRTs, or synthetic risk transfers

This means if the account defaults, the outside investors assume most of the risk in return for some regular payments, freeing up the bank's ledger. It is a form of insurance used by banks to allow them to free up capital. In 2024, nearly $100B worth of SRT notes were sold.

The shadow banking system is a group of intermediaries that operate outside of normal banking regulations

The nonbank financial intermediaries that make up the shadow banking system legally provide services that are similar to those of traditional commercial banks. Although the term isn't used as often as it once was, private credit firms are technically part of the shadow banking system, as are hedge funds, payday lenders, buy now, pay later companies, and more.

Companies sometimes issue corporate bonds to raise capital

These bonds offer investors regular interest payments in addition to the return of the principal amount at maturity. They allow companies to raise capital without losing ownership.

An explanation of hard credit checks vs. soft credit checks

Some buy now, pay later services do a soft credit check rather than a hard credit check, like credit card companies would do when someone applies for a card. While hard credit checks can impact your credit score, soft pulls typically do not.

Mortgages are loans used to buy property

A mortgage is a loan used to buy property, like a house. Borrowers typically put down a percentage of the cost of the home, and the amount left over is financed through a lender, like a bank.

Investors need a 'margin account' to short sell stock

Margin accounts are leveraged accounts through brokerage firms that allow investors to make trades without the full amount of capital on hand. Similar to a secured loan, margin accounts often require some form of collateral and typically have a cap on how much investors can borrow. However, trading with a margin account is much riskier than a traditional investment account. Fees and charged interest are due on margin accounts, regardless of trade performance, meaning it's possible for investors to lose more money than just their initial investment.

Convertible notes represent loans that startups owe investors

In the second part of a two-part series, convertible notes are explained to be a tool angel investors use to ensure they see a return on their investment in a startup.

Fractional reserve banking creates deposits from loans, not the other way around

The traditional view of banking is that customers deposit money into the bank and the bank lends out those deposits. That's partly true, but most banks work by making loans first, which creates an asset on their balance sheet as a corresponding deposit. Banks often operate under a money multiplier ratio, lending out several times their total reserves.

Payday loans typically have higher interest rates than cash advances

Cash advances and payday loans are both short-term loans that allow borrowers to access cash quickly. Payday loans are much shorter-term, often due in two weeks or by the borrower's next paycheck, and have much higher interest rates.

Are credit unions living up to DEI promises?

Credit union insiders often say their institutions better serve minority bankers through a combination of a not-for-profit ethos and community focus. However, a recent probe found that the largest US credit union rejected more than half of all Black applicants for conventional mortgages. To dive deep into Navy Federal Credit Union’s mortgage practices, read this journalistic investigation.

The national debt consists of public debt and intragovernmental debt

The national debt consists of money owed to private investors who have purchased Treasury securities and money owed by one sector of the government to another. They’re respectively called public debt and intragovernmental debt.

CD ladders are an investing strategy in which you buy multiple CDs with different maturity dates

This way, you take advantage of high interest rates with longer-term CDs while keeping liquidity with shorter-term CDs. If you're well acquainted with the basics of CD investing, the Wall Street Journal's Oyin Adedoyin, and guest host Danny Lewis, can tell you how staggering your investments makes good money.

Tranches slice financial products into segments

Specifically, tranches are slices of securities (think: bonds or mortgages) divided by risk and characteristics to attract different investors with a variety of risk tolerances.

Venture capital is a form of funding provided to early-stage companies with high growth potential, typically in exchange for an equity (or ownership) stake

Real estate investment firms handle enormous, complex real estate transactions

In the large-scale projects real estate investment firms handle (such as huge commercial developments), the parties involved in a sale are more likely to be large corporate real estate developers and investors than individuals.

Capital assets include investments from stocks to fine jewelry

Capital assets can be classified as property owned and used for personal or investment reasons. If a capital asset grows in value and the holder decides to sell it, their “capital gains” would be roughly the difference between the original purchase price and the amount of money they sold the asset for.

DAI is a popular stablecoin backed by cryptocurrency rather than fiat currency

DAI is backed by collateralized debt denominated in several major cryptocurrencies, including ethereum's ether. It was created by Rune Christensen in 2017 with the goal of helping create a credit system that would allow users to take out loans collateralized by cryptocurrencies.

Angel investors typically fund a startup at an earlier stage than venture capitalists

Angel investors and venture capitalists both invest in startups, but they differ in a few key ways. Angel investors typically invest earlier and in a smaller amount.

Student loan debt isn’t evenly distributed across age groups

Millennials and Gen X borrowers account for more than 70% of outstanding federal student debt ($1.1T). The discrepancy is driven by several factors, including a drop in college enrollment by younger Americans and older cohorts having more years to pay off balances.

Roughly 43 million US borrowers owe roughly $1.7T in student debt, the second-largest source of consumer debt behind mortgages.

Hedge funds, the private investment firms that trade a wide swath of financial assets, make money by imposing steep fees on investors and from the fund's investment performance.

Learn how to read a prospectus, the juicy document that any company must file with the SEC before going public.

The first steps to rebuilding your credit score include getting to know exactly what's on your credit report and figuring out how far you are from the '700 club,' or 'good score' range.

Some coin denominations have ridges etched on their sides, partly to prevent counterfeiting, in a practice called 'reeding.'

Memecoins are a type of cryptocurrency—a form of digital currency with a wide variety of uses—created around popular 'memes,' or viral internet jokes.

The American Society of Civil Engineers' infrastructure report card gave the US a C in 2025, its highest grade since the project launched in 1998.

The Nasdaq's 'Magnificent 7' companies are responsible for roughly 40% of the Nasdaq 100 index's gains, while the remaining 93 companies account for the other 60%.

Netflix profits when you're not watching, and its movies are designed that way—read a detail-rich critical essay exposing lesser-known Netflix takes

Gerrymandering works through two techniques: cracking opposing voters across districts to dilute their power, and packing them into a few to waste their votes in lopsided majorities.

A Yale student wrote a profound essay about the consulting industry's influence on elite college students that was published in a book of her writing after she died in a post-graduation car accident.

Dirty lightning is a thunderstorm created from friction between rising and falling flows of ash and smoke during volcanic eruptions.

When caught in the mouths of cardinal fish, seed shrimp release glowing, bioluminescent chemicals, which alert predators of the cardinal fish, prompting the shrimp's ejection.

Domino's Pizza's 30-minute delivery guarantee was responsible for the chain's 1980s surge, but it was discontinued after the company was found liable for delivery driver accidents.

The first line of 'immortal' human cells, which can divide indefinitely and are used in scientific research, was nonconsensually taken from a Black woman.

See a ranking of the best (and worst) Federal Reserve Chairs since 1914 out of the 16 men and women who have held the office since.

Objects can be 3D printed with light by projecting 2D computerized tomography (CT) scans onto rotating cylinders of resin, which solidify upon exposure.

Corals are themselves not coral reefs—the term refers to the tiny marine invertebrates that build the rigid reef.

While El Niño moves warm Pacific Ocean waters east along the equator, La Niña moves them west, shifting where rainfall will become more common for months.

Doctors differentiate between a phobia and fear by asking patients whether their fear interferes with their day-to-day activities.

Ebola is a filovirus, meaning it resembles a thread under a microscope, though it sometimes twists and can resemble a bowl of spaghetti.

Mid-century modern graphic designers, known for their bright colors and bold lines in advertising, also found success with children's books.

To reduce wrinkles in clothing, research recommends gentle wash cycles with more water and tumble drying with smaller loads and longer times.

Prince's sexually explicit 1984 track 'Darling Nikki' attracted the ire of the Parents Music Resource Center, an advocacy group that inspired the Parental Advisory sticker, even though the song ends with a Christian message.