Private credit — also called “private lending” or “direct lending” or “private debt” — refers to a type of financing where investors lend money directly to businesses, without going through a traditional bank or public market.
Unlike bank loans, which are funded using customer deposits, private credit is funded by private investors, such as asset managers, institutional funds, or high-net-worth individuals. These loans are not listed or traded on public exchanges — they are private agreements between the lender and the borrower.
Because of this direct, non-public nature, the terms of private credit deals can often be more flexible. Lenders and companies can negotiate terms that suit both parties, including customised repayment schedules, interest rates, and collateral requirements. This makes private credit a valuable option for businesses that need capital but may not meet the strict criteria of banks, or that prefer alternative funding to issuing equity.
For investors, private credit offers an alternative asset class that may provide higher yields than traditional fixed-income investments, though it typically involves longer holding periods and less liquidity. As a result, private credit is playing a growing role in portfolios that seek diversification, income, and exposure to real-economy lending opportunities.
What is private credit?
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