What Is Private Credit for Businesses?

Private credit refers to business financing provided by non-bank lenders and private capital sources rather than traditional banks. It's a broad category that can include term loans, asset-based facilities, receivables financing, merchant cash advances, and other customized structures. For businesses that don't fit a conventional bank's credit box — or that need to move faster than a bank can — private credit can be an alternative path to capital.

How It Differs From Traditional Bank Financing

Traditional bank loans follow standardized underwriting guidelines, regulated capital requirements, and longer approval timelines. A bank evaluates a business against a relatively fixed set of criteria, and if the business doesn't fit, the answer is often no. Private credit providers aren't bound by the same constraints. They may evaluate a wider range of factors — assets, cash flow, contracts, receivables — and structure financing around the actual transaction rather than fitting the business into a preset product.

The Trade-Offs

Private credit is not inherently better or worse than bank financing — it's a different tool. The trade-off is generally flexibility and speed versus cost. Private credit can sometimes fund faster and finance situations a bank may decline, but it may also come with higher costs or different terms than a conventional bank loan. The right choice depends on the business's situation, urgency, and what it qualifies for.

When Businesses Explore Private Credit

Businesses commonly turn to private credit when:

• They need capital faster than a bank can deliver.
• They don't meet a conventional bank's credit or time-in-business criteria.
• They're carrying short-term obligations — like multiple MCAs — they want to restructure.
• A transaction requires a customized structure a standard product doesn't fit.
• They have strong assets or receivables but uneven financials.

Common Structures Within Private Credit

Private credit is a category, not a single product. Common structures include:

• Term loans — a lump sum repaid over a defined term, similar to a bank term loan but with flexible underwriting.
• Asset-based financing — financing secured by business assets like equipment, inventory, or real estate.
• Receivables-based financing — financing tied to outstanding invoices or future receivables, including invoice factoring and merchant cash advances.
• Customized facilities — structures built around the specific transaction, collateral, or cash flow of the business.

Private Credit and MCA Buyouts

For businesses carrying existing MCA obligations, private credit is often where alternative structures live — especially now that SBA loans are no longer available for MCA refinancing (see our article on SBA MCA refinancing rules). A private credit term loan or asset-based facility may be one structure explored as part of an MCA buyout, subject to underwriting.

Qualification Considerations

Qualification varies by provider and structure, but commonly reviewed factors include business revenue and cash flow, time in business, credit profile, the quality and value of available assets or receivables, existing obligations, and overall financial condition.

Explore Your Options

If private credit sounds like it may fit your situation, explore private capital options or use our payment calculator to estimate costs for different structures.