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Private CreditThe private credit industry offers nonbank loans directly to businesses, particularly privately held midmarket companies. A variety of institutions house private credit funds, from private equity firms to insurance companies. As of early 2025, the global private credit market was estimated to be worth roughly $3T.
Private credit can be traced back to ancient Mesopotamia, where farmers borrowed seeds and repaid lenders after the harvest. The modern industry took off after the 2008 financial crisis, when banks scaled back from lending and nonbank lenders stepped in to fill the gap.
Traditional investment banks (think: Goldman Sachs, JPMorgan) use public markets to lend to large businesses. These institutions typically underwrite a loan, distribute it to investors as "term loans" or bonds, and collect fees along the way. With private credit, the loan goes directly to the borrower, with the lender generally holding it to maturity. Because they aren't traded on public markets, they're illiquid, which contributes to higher interest rates, alongside other factors.Explore Private Credit
What we've found
Why private credit has faced challenges in recent yearsThe factors that some experts say are driving what could be private credit's most challenging era since the 2008 financial crisis include global economic uncertainty around trade and tariffs, investor fears about the amount of money being spent on artificial intelligence, and more. S&P GlobalBorrowers were increasingly defaulting on private credit loans as of early 2026Risks 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. CNBCWhy private credit is attractive to both businesses and investorsWhile investors are attracted to the high rates, private credit is particularly attractive to mid-sized businesses that are too small for bank syndication and want faster, more flexible financing options. State Street Investment ManagementRetail investors cannot directly invest in private credit funds—but other financial vehicles can offer exposure to the industryFor example, as some US regulations have loosened in recent years, retail investors have begun to get exposure to the private credit market via ETFs that invest in publicly traded financial vehicles with private credit exposure, such as BDCs. CNBCPrivate credit and private equity are both alternative assetsLike private equity fund managers, private credit managers typically raise funds directly from investors, lending to corporations. The borrowers can benefit from the lack of middlemen and resulting efficiency, and the lenders often yield comparatively higher returns. BlackstoneSome private credit funds trade on the stock marketThese funds, which trade at market prices, are called "public BDCs," which stands for "business development companies." For instance, the global alternative investment manager Ares Management Corp. has a public BDC. JP MorganApollo Global Management and Blackstone are among the world's top 20 private credit fund managersWhile Blackstone is the world's largest alternative asset manager, Apollo Global Management is a large private equity firm. Apollo had $480B in private credit assets under management as of January 2025. S&P GlobalSome semi-liquid private credit funds saw a surge in investor redemptions in early 2026This raised red flags about the state of the private credit market at large. However, experts have cautioned that the idea that private credit is on the verge of collapse is overstated. Yahoo FinanceDirect lending is the most common form of private creditOther 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. SpotifyPrivate credit grew from a $250B asset class in 2010 to around $1.5T in early 2024That's partly due to the industry's rising interest rates that created more upside for investors. Interest rates have increased in recent years alongside the Federal Reserve's interest rate hikes beginning in 2022. Private credit loans typically stretch over multiple years (typically between five and seven years, although term lengths vary). CNBCThe basics of private credit—plus why it matters in 2026This podcast episode—one of the best we found for explaining the ins and outs of private credit—details how private credit became a significant lender for the tech industry, and how AI could disrupt private credit investments. SpotifyBefore the modern banking system, most lending resembled private creditBefore 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. YouTubePrivate credit is a nonbank loan made directly to a businessSimilar 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. InvestopediaFamily offices have been increasing their allocations to private creditPrivate firms that manage family fortunes have been investing more in alternatives like venture capital and real estate, impacting the wider financial world. CNBCThe shadow banking system is a group of intermediaries that operate outside of normal banking regulationsThe 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. Encyclopedia Britannica'Floating rate' loans periodically adjust their interest rates in accordance with economic conditionsWhen the Federal Reserve began raising interest rates in 2022 to combat inflation, interest payments borrowers owed to private credit lenders increased accordingly. Private credit funds benefited as loan returns increased, making the asset class attractive to investors at the time. InvestopediaDirect lending typically involves 'senior loans'Direct lending, the most common subtype of private credit, typically involves senior loans which are secured by a company's assets. "Junior capital," on the other hand, is a type of private credit that is not secured by a company's assets, making it generally riskier than direct lending. KiplingerFormer US Senator Mitt Romney cofounded a revolutionary private equity firmMitt Romney cofounded Bain Capital—a private investment group that manages more than $215B—in the 1980s before becoming a politician. Bain Capital is credited with revolutionizing private equity by focusing on consolidating and streamlining business operations rather than relying on financial engineering to increase company profits. ForbesThe 'Two and Twenty' structure allows hedge funds and private equity firms to earn significant returnsWith this structure, firms charge limited partners or "LPs" a 2% management fee for overseeing the fund (assets under management or AUM) and take 20% of the fund's overall profits (carried interest). Many private credit funds also operate under this structure. Corporate Finance InstituteKohlberg Kravis Roberts was the world's largest private equity firm as of 2025Headquartered in New York City, KKR raised more than $117B between 2020 and 2024. KKR is credited for pioneering the leveraged buyout strategy for private equity in the 1970s and now owns nearly 300 companies. Visual CapitalistHamilton created the First Bank of the United StatesAs Treasury secretary, Alexander Hamilton proposed the First Bank of the United States to stabilize national finances—serving as the government's fiscal agent, managing debt, and expanding credit through a public-private banking model. InvestopediaInvestors collectively own $28T in US Treasury securitiesThe 10-year Treasury yield is a central measure of the health of the economy, shaping how much both the government pays on its debt and the cost of borrowing for the private sector. This explainer provides stats and explainers on the important metric. EconofactFintech could help democratize access to bankingMore than 1.3 billion adults worldwide do not have access to basic banking services as of this writing—but some experts believe that the fintech industry can help with that by targeting groups of people who have historically been underserved by traditional banks. UN Trade and Development (UNCTAD)15 states offer school voucher programs, serving nearly 350,000 studentsVoucher programs direct public K–12 funding to families in the form of tuition grants for private schools and are typically targeted to low-income or special-needs students. Education WeekHow stock exchanges like Chicago Mercantile act as trading refereesAs opposed to New York's stock exchange, Chicago's Mercantile exchange emphasizes futures contracts on commodities. This podcast episode breaks down how exchanges actually work, make money, and streamline the market. Business Breakdowns
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