Private credit · Updated 2026
Private Credit Funds: How Direct Lending Works and What It Costs
A private credit fund lends directly to companies instead of buying syndicated bank loans, most commonly through unitranche facilities priced at SOFR plus 475–650 basis points. In 2026 the asset class manages well over $1.7 trillion globally, and the typical middle-market unitranche is sized at 4.0x–5.5x EBITDA with one or two maintenance covenants.
By the Coyote Wealth Editorial Team — researchers and writers with experience across leading Wall Street financial institutions. Updated August 8, 2026.
Coyote Wealth data point
SOFR + 537 bps
Median all-in spread on LMM unitranche facilities (Coyote Wealth 2026 estimate)
Coyote Wealth's estimate is based on 45 practitioner-reported middle-market credit agreements executed between Q3 2025 and Q2 2026, weighted toward borrowers with $10M–$50M of EBITDA. Add 50–100 bps of original issue discount on first-lien unitranche and 25–50 bps of annual undrawn revolver commitment fee to reach a true all-in cost.
10 major private credit and direct lending managers
Ares Management
Focus: Direct lending, opportunistic and junior credit
HQ: Los Angeles, CA
- Segment:
- Upper middle market
One of the largest private credit platforms globally, able to hold facilities of $1B+ on its own balance sheet. Relevant to borrowers above roughly $50M of EBITDA.
Blue Owl Capital
Focus: Diversified direct lending and GP capital solutions
HQ: New York, NY
- Segment:
- Upper middle market
Large-scale lender with substantial permanent capital from non-traded BDC vehicles, which supports certainty of funding on big commitments.
HPS Investment Partners
Focus: Senior and junior private credit
HQ: New York, NY
- Segment:
- Large-cap
Known for complex, structured credit solutions and for competing with the broadly syndicated market on jumbo unitranche deals.
Golub Capital
Focus: Sponsor-backed middle-market direct lending
HQ: New York, NY
- Segment:
- Middle market
Long-tenured sponsor lender with a reputation for repeatable process and high re-up rates from private equity clients.
Antares Capital
Focus: Sponsor-backed senior debt
HQ: Chicago, IL
- Segment:
- Middle market
One of the most active middle-market agents by deal count, with deep sponsor coverage and a large administrative agency function.
Twin Brook Capital Partners
Focus: Lower middle market senior debt
HQ: Chicago, IL
- Segment:
- $3M–$50M EBITDA
Purpose-built for the lower middle market, which matters because upper-market lenders often will not staff a $25M facility properly.
Monroe Capital
Focus: LMM direct lending and opportunistic credit
HQ: Chicago, IL
- Segment:
- $3M–$35M EBITDA
Active LMM lender across sponsored and non-sponsored borrowers, including independent sponsor transactions.
Churchill Asset Management
Focus: Middle-market senior lending and junior capital
HQ: New York, NY
- Segment:
- Middle market
Nuveen-affiliated platform combining senior lending with equity co-investment and a large LP-facing fund business.
Comvest Credit Partners
Focus: Non-sponsored and asset-oriented lending
HQ: West Palm Beach, FL
- Segment:
- $10M–$100M facilities
Unusual willingness to lend to non-sponsored borrowers and to underwrite asset coverage rather than pure cash-flow multiples.
Blackstone Credit & Insurance (BXCI)
Focus: Large-cap direct lending and asset-based finance
HQ: New York, NY
- Segment:
- Large-cap
Scale lender with insurance-linked permanent capital; competitive on price for the largest, most defensible credits.
Also active in middle-market private credit: Barings, PennantPark, Bain Capital Credit, Brightwood Capital, NXT Capital, Deerpath Capital, and dozens of LMM specialists. Inclusion is editorial and is not an endorsement, a recommendation, or a solicitation to invest.
How a unitranche facility is actually priced
Base rate
Term SOFR, usually with a floor of 0.75%–1.00% in LMM credit agreements. The floor matters when rates fall.
Credit spread
475–650 bps for first-lien unitranche in the middle market; higher for non-sponsored borrowers, cyclical end markets, or leverage above 5.0x.
Original issue discount
1.0–2.0 points paid at funding, effectively 25–50 bps of additional annual yield over a typical hold period.
Fees
Closing fee of 1.0%–2.0%, undrawn revolver commitment fee of 25–50 bps, agency fee, and prepayment protection of 102/101 in years one and two.
What borrowers should compare beyond the spread
The cheapest term sheet is regularly the most expensive facility. Two lenders 50 bps apart can differ enormously on the covenant package, the definition of EBITDA, the size of the accordion, and how they behave in a covenant breach.
The three provisions that matter most in practice are the EBITDA definition (which add-backs are permitted and whether they are capped), the leverage covenant cushion (35% versus 25% cushion to the base case is the difference between a manageable soft quarter and a default), and the delayed-draw acquisition facility, which determines whether the lender is a partner in a buy-and-build or a bystander.
Who private credit is right for
Sponsor-backed buyouts
The core use case. A single lender or small club funds the acquisition with speed and confidentiality a syndication cannot match.
Non-sponsored founder businesses
A shrinking number of lenders will underwrite without a private equity sponsor. Comvest, Monroe, and several LMM specialists are the realistic starting point.
Buy-and-build platforms
Delayed-draw term loans priced at the original spread are the single most valuable feature for an acquisitive platform.
Companies below $3M EBITDA
Generally too small for institutional private credit. SBA 7(a), seller notes, and specialty lenders are the practical options.
Methodology and limitations
- Managers are selected on disclosed direct-lending activity, dedicated middle-market teams, and demonstrated ability to hold or agent facilities in their stated size band.
- Pricing figures are Coyote Wealth estimates from 45 practitioner-reported credit agreements executed Q3 2025 – Q2 2026 and are not audited market data.
- This page is informational and educational. It is not investment advice, an offer to sell, or a solicitation of an offer to buy any security or fund interest.
- Limitations: private credit terms are confidential; spread dispersion is wide and driven by borrower quality, sponsor relationship, and leverage.
No firm paid for inclusion or placement. Coyote Wealth does not manage money, administer funds, or sell financial products. Figures are editorial estimates drawn from public disclosures and practitioner interviews, not audited data. Corrections: contact the editorial desk.
Frequently asked questions
What is a private credit fund?
A private credit fund is a pooled investment vehicle that originates loans directly to companies rather than buying publicly syndicated debt. Most middle-market private credit is first-lien unitranche debt held to maturity, priced at a floating spread over Term SOFR.
How much does private credit cost a borrower in 2026?
Coyote Wealth estimates a median all-in spread of SOFR plus 537 basis points on lower-middle-market unitranche facilities, plus 1–2 points of original issue discount, a 1%–2% closing fee, and 25–50 basis points on undrawn revolver commitments.
How much leverage will a private credit fund provide?
Typical middle-market unitranche facilities are sized at 4.0x–5.5x EBITDA for stable, sponsor-backed businesses. Lower-middle-market and non-sponsored borrowers usually see 3.0x–4.0x, and cyclical or customer-concentrated businesses see less.
What is the difference between private credit and a bank loan?
Banks underwrite to regulatory capital rules, often syndicate the loan, and generally require tighter covenants and lower leverage. Private credit funds hold the loan themselves, close faster, tolerate more leverage and complexity, and charge a higher spread for that flexibility.
Do I need a private equity sponsor to borrow from a private credit fund?
No, but the lender universe narrows substantially. Most large direct lenders focus on sponsor-backed transactions; non-sponsored founder-owned borrowers should approach lenders with explicit non-sponsored programs such as Comvest, Monroe Capital, or a lower-middle-market specialist.
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