PRIVATE CREDIT MARKET ANALYSIS
Private Credit Has Capital—Why Finding the Right Lender Is Still Difficult
Ample private credit capital does not mean every lender will finance every company. In a selective market, borrower preparation and lender fit determine whether a financing process gains traction.
Private credit managers have capital, but financing is not broadly available to every company.
Private credit managers continue to hold substantial capital, but that does not mean financing is broadly available to every company. Lower transaction volume, greater credit scrutiny, and differences among lender mandates have made financing processes more selective. Companies are more likely to gain lender interest when they present reliable information, define an appropriate structure, and approach lenders whose criteria fit the opportunity.
Capital Is Available, but Lending Activity Has Slowed
North America-focused closed-end direct-lending funds raised $16.25 billion during the second quarter of 2026, compared with $1.3 billion during the first quarter. During the same period, U.S. direct-lending volume declined approximately 55% to $33.59 billion, and completed financing transactions declined from 217 to 154.
Large private-credit platforms also continued reporting substantial capital formation. Hayfin announced more than €15 billion for its fifth direct-lending fund and related vehicles. Monroe Capital announced $6.1 billion of investable capital for its private-credit strategy, while Golub Capital reported $20.5 billion of new investment capital raised during 2025.
These figures demonstrate an important distinction: capital raised by private-credit managers is not the same as capital deployed into new loans. Lenders must still find opportunities that satisfy their return requirements, underwriting standards, portfolio construction, and investment mandates.
Why Direct-Lending Activity Has Slowed
Private-equity-backed transactions have historically generated a significant share of direct-lending activity. During the second quarter of 2026, private-equity-backed direct-lending volume declined from $44.61 billion to $19.40 billion. Lending associated with leveraged buyouts declined from $22.31 billion to $9.79 billion.
Fewer acquisitions result in fewer acquisition-financing opportunities. Companies have also delayed some refinancings, recapitalizations, and expansion projects while assessing interest rates, economic conditions, valuation expectations, and future operating performance.
Competition from bank-led syndicated markets can also influence borrower decisions when public-market pricing becomes comparatively attractive.
Underwriting Has Become More Selective
Slower origination does not mean private-credit lenders have stopped lending. It means they are applying greater selectivity.
Technology and software businesses may receive additional scrutiny as lenders evaluate customer retention, competitive positioning, proprietary data, switching costs, mission-critical functionality, and exposure to artificial-intelligence disruption.
Lenders are increasingly focused on:
Sustainable cash-flow generation
Interest coverage
Total leverage and deleveraging capacity
Customer and supplier concentration
Recurring versus transactional revenue
Asset coverage
Management experience
The proposed use of proceeds
Repayment and refinancing capacity
What This Means for Companies Seeking Financing
A large amount of private-credit dry powder does not create a universal lending market. Every manager has a distinct credit box covering factors such as financing size, EBITDA, industry, ownership, collateral, leverage, geography, use of proceeds, required return, and structural preferences.
A company can therefore approach numerous active lenders and receive little engagement even when those lenders have capital available. The problem may be lender fit rather than the complete absence of financing.
Before outreach, management should define:
The amount of financing required
The intended use of proceeds
The preferred financing structure
Historical and projected operating performance
The leverage the business can responsibly support
The information needed for lender review
The characteristics of lenders most likely to fit the opportunity
Finding the Right Lender Matters More Than Finding Any Lender
Private credit is fragmented. Some lenders focus primarily on sponsor-backed transactions, while others favor founder-owned or family-owned companies. Some specialize in recurring-revenue businesses, asset-heavy companies, healthcare, manufacturing, technology, real estate, or special situations.
The central challenge is therefore not simply finding institutions with money to invest. It is identifying lenders whose underwriting criteria, structuring capabilities, decision processes, and portfolio objectives align with the company and the proposed transaction.
A targeted process is generally more effective than contacting a broad lender list without first understanding each lender's mandate.
How Jannu Capital Supports the Process
Jannu Capital helps lower-middle-market and middle-market companies assess financing readiness, evaluate potential structures, position the opportunity, identify aligned private-credit lenders, and coordinate a targeted financing process.
Jannu Capital is an advisor, not a lender, and does not make credit decisions or guarantee financing outcomes.
Sources
- 1.Reuters. US direct-lending activity falls even as private credit firms raise more cash. 2026-07-09.
- 2.Hayfin Capital Management. Hayfin announces record close of Direct Lending Fund V in excess of €15bn. 2026-07-02.
- 3.Monroe Capital. Monroe Capital Closes $6.1 Billion in New Investable Capital for its Private Credit Strategy. 2026-01-06.
- 4.Golub Capital. Golub Capital Continues Strong Track Record of Consistent Results in 2025. 2026-01-08.
- 5.PwC. Private Equity: US Deals 2026 Midyear Outlook. 2026-01-01.
- 6.Reuters. Cost gap drives some US borrowers from private credit to bank-led syndicated loans. 2026-05-04.
- 7.Reuters. Private credit boom cools as lending and flows slow sharply. 2026-06-05.
- 8.Reuters. Private credit roundup: Discounts show the cost of getting out. 2026-07-17.
- 9.Bank for International Settlements. Private credit's software lending meets AI disruption. 2026-03-01.
- 10.EY. US Private Equity Industry Insights. 2026-01-01.
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Evaluate Your Financing Opportunity
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