Private credit glossary · 2026

Private credit vs. bank lending: what’s the difference?

Private credit is lending from specialized non-bank funds rather than regulated banks — it costs more than a bank loan but closes faster, flexes to the deal, and reaches borrowers banks can’t serve.

	Bank lending	Private credit
Capital source	Regulated bank balance sheets, deposits	Specialized funds (pension, endowment, insurance capital)
Speed to close	Weeks to months; committee-driven	Days to weeks; investment-team driven
Structure flexibility	Standardized; strict covenants	Bespoke: unitranche, PIK, delayed draw, covenant-lite
Price	Cheapest debt available	Premium of roughly 2–5 points over comparable bank debt
Borrower fit	Strong credit history, hard collateral, profitability	Complex, leveraged, fast-moving, or story-driven credits
Relationship	Often transactional, regulated oversight	Direct, fewer stakeholders, decisions by the deal team

By the numbers — live from the TerraNova dataset

912 total active lenders tracked
908 non-bank private credit funds
4 bank-affiliated lenders
21 funds that close in 30 days or less

The private credit universe is 227x larger than the bank-lender subset. Updated daily.

When bank lending makes sense

✓ Strong, profitable companies with 3+ years of operating history
✓ Low leverage (under 3x debt-to-EBITDA) with hard collateral
✓ Non-urgent timelines — 60-90 day closing is acceptable
✓ Standardized capital structures: senior secured, revolving credit
✓ Cost is the primary concern — bank debt is the cheapest available

When private credit wins

→ Speed matters — you need a term sheet in days, not weeks
→ Structure matters — you need unitranche, delayed-draw, PIK, or covenant-lite
→ Leverage is higher than banks allow (4x+) but cash flows are strong
→ You're in an industry banks avoid: software, healthcare services, sponsor-backed
→ Certainty of close is worth the rate premium — the deal must happen

Common questions

Is private credit more expensive than a bank loan?

Yes — typically 2–5 percentage points more than comparable bank debt. Borrowers pay the premium for speed, certainty, flexibility, or simply access when banks can't do the deal.

Why do companies use private credit instead of banks?

Four reasons: speed (closes in days-to-weeks), certainty (fewer committees), flexible structures (unitranche, delayed draw, covenant-lite), and access — banks often can't underwrite leveraged, complex, or fast-moving borrowers.

How big is the private credit market?

The TerraNova database tracks 912 active private credit funds (live count), with the median direct-lender check-size band around $10M–$100M — the market's center of gravity is the middle market, not mega-deals.