What Is Private Credit?

An attorney and a pioneer in the funds financing field, Zac Barnett is a finance practice leader with over 15 years of experience. He has helped several private fund sponsors and investment banks close some of America’s largest funds financing deals. As a lawyer, he co-founded the Chicago-based finance firm Fund Finance Partners, LLC. One of Zac Barnett’s expertise in the funds financing space is private credit.

Private credit, also known as private debt, direct lending, or private lending, refers to the type of loan provided by a non-bank lender. Private credit may include small business and consumer loans and venture debt. These loans primarily cater to the borrower’s specific business needs and are usually requested when startups and other small business owners can’t obtain credit from banks.

As a non-bank loan, private credit is considered high risk. Lenders and investors, in turn, have higher interest rates to balance this risk. Typically, private credit deals are short-term and have a maturity of nine months. After refinancing, borrowers can repay the loan, including the interest, within one month.