Private credit is popular with mid-market firms because loans are tailored to the company and the lender does not disappear once the money is disbursed. It surprises people who’ve never borrowed outside of a bank that those factors matter more than the rate. Take a company with around three hundred employees and plenty of orders but one bad contract from a couple of years ago. The bank takes four months and then says no. It might say yes, with conditions tailored to a business without a slow season. Lenders come to the site to evaluate what the company has and what it plans to do over the next 18 months.

A senior appointment at Third Eye Capital in 2023 is a useful example of how the serious lenders see their end of the bargain. The firm hired a president and chief operating officer from a large global investment house. Not finding deals. Running the place. A lender does not hire for that unless it expects to be managing the relationship long after closing, through reporting, through the quarter where the numbers dip, through whatever comes after. Owners who have had a hard year tend to notice.

Why not stay with banks?

Banks are not set up for the companies that need the most help, and most owners find this out when there is no time left. The firm describes the businesses it lends to as underserved or overlooked, which is accurate rather than clever. A company in the middle of a founder handover, or with a big contract signed but not yet paying, or carrying one loss-making year, falls outside what a bank’s model will approve. The manager may like the company. That does not get it through committee.

A lender underwrites assets and a plan instead of a score for private credit. Then there is the matter of timing. Any bank facility can sit for a quarter. If a supplier deadline or acquisition closes in ten weeks, a lender who commits to a specific day is worth paying more. Those who have sat through a slipped closing know this.

Shape of the deal

The difference becomes concrete in how the facility is put together. Security sits on receivables, stock, equipment and signed contracts, so a company with real assets and a thin profit history can still borrow. Repayment can follow the company’s own cash pattern, which for a business paid in lumps at project milestones is sometimes the whole reason to sign. Covenants are negotiated for the actual situation, perhaps room on one measure in exchange for monthly reporting on another. And because there is one team with its own capital and nobody else to consult, approval and funding can happen in weeks.

A lender that has backed well over a hundred companies has seen most of what goes wrong at a mid-market business before, and the borrower is paying in part for that memory. When a quarter goes badly, the bank’s reflex is to reduce exposure. That is how banks are wired, and there is no point resenting it. A private lender that has been through this before asks whether the plan still holds and what has to change, which is a different conversation entirely. For a company in the middle of growth or the middle of a problem, that is the counterparty worth having.