As the nation’s only research center of its kind focused on the performance and competitiveness of middle market companies, the National Center for the Middle Market (NCMM) tracks issues related to growth including access to capital, private equity investment, and working capital management. Recently, we completed a study on private equity and private credit in the middle market in collaboration with Future Standard, a global asset management firm based in Philadelphia, Pennsylvania. Based on the survey findings of 400 middle market leaders, private credit has become an increasingly prominent component of the middle‑market financing landscape. While the sector has grown substantially over the past decade, new data suggests that its integration into corporate capital structures is now both broad and multifaceted. Understanding how and why firms use private credit—and where they encounter limitations—offers insight into the evolving financial environment in which middle‑market companies operate.
Adoption rates are notably high. In our survey data, eighty‑eight percent of PE‑owned middle‑market companies and eighty percent of non‑PE‑owned firms report using at least one form of private credit. Usage is not confined to a single instrument; firms employ an average of 2.3 types of private credit, ranging from asset‑based lending and senior secured loans to unitranche structures, mezzanine financing, and revenue‑based or structured equity. Asset‑based lending remains the most common entry point, but the diversity of instruments reflects a broader shift toward tailored capital solutions.
Access to private credit is shaped heavily by relationships and specialized intermediaries. Companies most often engage investment banking partners or rely on personal networks to identify and secure financing. Accounting firms, wealth advisors, and capital‑raising events play secondary but still meaningful roles. This pattern underscores the importance of expertise and established connections in navigating a fragmented and highly customized market.
Overall sentiment toward private credit is positive. Many users report that their experience met or exceeded expectations, and 72 percent view private credit as important to achieving their growth objectives. Respondents frequently cite speed, flexibility, and responsiveness as distinguishing features. Faster approval processes, customized terms, and relationship‑driven interactions differentiate private credit from traditional bank financing, particularly in situations requiring rapid execution or non‑standard structures.
At the same time, firms recognize tradeoffs. The higher cost of capital remains the most frequently cited drawback. Some companies also point to shorter repayment horizons, more intensive reporting requirements, and concerns about lender behavior during economic downturns. The lack of standardization across private credit providers can introduce complexity, and covenants—while often more flexible than those in bank loans—are still present and sometimes restrictive.
Looking ahead, interest in private credit is likely to continue expanding, though not uniformly. One‑quarter of firms not currently using private credit indicate they are likely to pursue it within the next three years, primarily to support expansion or access more adaptable forms of capital. Firms expressing little interest tend to have strong existing bank relationships, limited near‑term financing needs, or a preference for organic growth and lower‑risk capital structures.
Taken together, the findings suggest that private credit has become a meaningful growth enabler for many middle‑market companies, particularly those seeking speed, flexibility, or specialized financing solutions. At the same time, cost and complexity remain important considerations. As the market continues to evolve, understanding these dynamics will be essential for companies evaluating their financing options and for stakeholders seeking to anticipate broader shifts in middle‑market capital formation.
