What is Private Credit?
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Photo by Austin Smart on Unsplash
Private credit or private debt is any non-bank lending activity. In other words, it is any debt investments that are not financed by banks and are not issued or traded in an open market.
It’s important to note that the term ‘private’ refers only to the entity providing the debt and not to the borrowing entity, which could be privately held or publicly listed.
Like traditional forms of debt capital, private credit is typically used by borrowers to obtain capital for purposes such as:
- Financing business expansion activities
- Meeting working capital needs and infrastructure
- Funding infrastructure or real estate development
- Buying out tired investors
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