TL;DR: Private credit is lending provided by non-bank institutions such as specialty finance firms and investment funds, rather than by traditional banks. Non-bank lenders can underwrite businesses that fall outside conventional bank criteria, which makes private credit a common source of growth capital for high-growth companies.
Private credit refers to loans made by lenders other than banks. These lenders, including specialty finance firms, credit funds, and growth lenders, raise capital from investors and lend it directly to companies. Because they are not banks, they are not bound by the same regulatory and balance-sheet constraints, which gives them flexibility in how they structure and underwrite loans.
Private credit has grown into a significant source of financing for companies that banks find difficult to serve, including high-growth, revenue-generating businesses that are not yet profitable on a traditional basis.
A bank typically underwrites historical profitability and hard-asset collateral, criteria that many growing software companies do not meet despite strong revenue and trajectory. Non-bank growth lenders underwrite differently, focusing on revenue quality, growth rate, retention, and capital history. This is why venture debt, a form of private credit, can be available to companies that would not qualify for a comparable bank facility.
Flow Capital is a non-bank lender providing venture debt to revenue-generating technology and tech-enabled companies. Its underwriting centres on the growth trajectory and revenue quality of the business rather than on conventional bank metrics, and its facilities are structured for growth, interest-only with a bullet repayment at maturity.
How is private credit different from a bank loan? Private credit comes from non-bank lenders with more flexible underwriting and structures. Banks lend against historical profit and collateral under tighter regulatory constraints.
Is venture debt private credit? Yes. Venture debt is one category within the broader private credit market, focused on high-growth, revenue-generating companies.
Related terms: Venture Debt · Growth Capital · Senior Debt · Asset-Based Lending
