How to Successfully Raise Private Credit

When Mark realized his growth plan outstripped traditional bank limits, he felt both excitement and anxiety. He’d heard of private credit but wasn’t sure how to navigate direct lenders, boutique funds or business development companies. If you’re staring down a capital gap, these steps will guide you from preparation to closing with clarity and confidence.

1 Understand the Private Credit Market

Private credit lenders aren’t bound by bank rules. They tailor loan structures—senior, unitranche or mezzanine—to your deal. Rates run higher than a bank’s prime rate, reflecting speed and flexibility. Ask yourself: what mix of cost and convenience fits your acquisition or growth project?

2 Preparation: Build a Compelling Package

• Financial Model  – Cash-flow forecasts, sensitivity tables and debt-service coverage ratios.
• Collateral Proposal  – List assets you can pledge: real estate, receivables, inventory.
• Sponsor Profile  – Bio, track record and relevant case studies.
• Use of Proceeds  – Detailed breakdown: acquisition, capex, working capital.
• Legal Documentation  – Draft term sheet, security agreements and intercreditor templates.

3 Sourcing Private Credit Lenders

You’ve got options. Placement agents specialize in mid-market deals. Online platforms match you to direct lenders. Or tap your network—lawyers, accountants and industry peers often know who writes tickets in your sector. Cast a wide net but target lenders whose sweet spot aligns with your size and industry.

4 Navigating Due Diligence

Expect deep dives. Lenders will comb through your financials, interview management and inspect collateral. Supply clean data rooms, answer questions swiftly and schedule site visits early. Good preparation shows you’re a partner who respects their process and mitigates resistance.

5 Negotiating Terms and Structure

Deals vary: a unitranche loan simplifies with one document but costs more than senior debt plus mezzanine. Don’t fixate on headline rate—look at all-in yields, upfront fees, prepayment penalties and covenant thresholds. Push for flex on covenants if your cash flows have seasonal swings.

6 Closing and Funding

Once terms are agreed, your counsel and the lender’s counsel finalize security docs, intercreditor agreements and closing checklists. Track every signature, resolve open items and schedule the wire. In most cases, funding lands in your account within 10 to 15 business days after the term sheet.

Private Credit Structures at a Glance

Loan Type	Features	Typical Use
Senior Debt	Lowest rate, strict covenants, first lien	Asset-heavy acquisitions
Unitranche	Single rate, simplified docs, blended senior/mezz	M&A for mid-market firms
Mezzanine	Higher yield, unsecured or second lien, equity kickers	Fill equity gaps

Key Questions to Ask Potential Lenders

• What’s the total all-in cost, including commitment and arrangement fees?
• Which performance covenants could trigger a default?
• Do you require a business valuation or third-party appraisal?
• How flexible is the prepayment schedule?

Private credit can feel like charting unknown waters. Yet with the right prep and partner, you’ll secure the funding you need on terms that make sense. Ready to bridge your capital gap?