Percent’s 2025 Private Credit Outlook: Shaping the Future of the Financial Landscape

Percent, a platform revolutionizing the private credit marketplace, has released its 2025 Private Credit Outlook, underscoring private credit as one of the most resilient and dynamic asset classes in global finance. With the market now approaching a remarkable $2 trillion in size, private credit has weathered significant challenges in 2024, including the Federal Reserve’s cautious rate cuts, a contentious U.S. presidential election, and ongoing geopolitical tensions. Despite this turbulent backdrop, private credit has proven its adaptability, with Percent’s gross returns maintaining a steady 14.6%, a testament to the asset class’s durability and growth potential.

Nelson Chu, Founder and CEO of Percent, emphasized the sector’s resilience, noting, “Last year demonstrated how private credit continues to deliver, even when the market faces adversity. As we enter 2025, the entry of banks into private credit underscores the asset class’s resilience and growing appeal. However, the lower middle market remains an untapped frontier, where financing gaps left by traditional lenders are most pronounced. This underserved segment offers unique opportunities to diversify portfolios, protect against inflation, and unlock value that larger players can’t replicate. This is where private credit will not only survive but thrive.”

Key Trends Shaping the Private Credit Landscape in 2025

According to Percent’s 2025 Private Credit Outlook, several critical trends are set to shape the sector:

  1. Expansion of Asset-Based Financing
    Asset-based financing, including merchant cash advances, trade receivables, and equipment loans, is poised for significant growth. These financing structures offer enhanced collateral protection for investors while providing more favorable terms for borrowers. This trend is expected to be a driving force in the continued expansion of private credit.
  2. Continued Growth of Direct Lending
    Direct lending, which includes senior debt, mezzanine financing, and unitranche loans, will remain a primary growth driver for the private credit market. As institutional investors continue to increase their allocations to these alternative assets, the direct lending space is anticipated to see robust expansion in the coming years.
  3. Federal Reserve’s Policy Easing
    The Federal Reserve’s expected rate cuts will likely enhance the appeal of private credit by providing a hedge against inflation and market rate volatility. As investors look for higher-yielding assets, private credit’s attractiveness will continue to grow, particularly as it offers more favorable returns than public bonds in a low-interest-rate environment.
  4. Increased Private Credit Diversification
    Investors are increasingly looking to diversify their portfolios across various deal types, company sizes, and geographic locations. This diversification strategy is designed to optimize risk-adjusted returns in both developed and emerging markets, enabling investors to mitigate risks while tapping into new growth opportunities.
  5. Technological Advancements and Enhanced Transparency
    The rise of digital platforms and data-driven underwriting processes will continue to improve transparency, efficiency, and access to high-quality private credit deals. Technology is playing an increasingly important role in making private credit more accessible and attractive to a wider pool of investors, ultimately driving the growth of the market.

Percent’s Role in Scaling Private Credit

Percent’s focus on the middle market of private credit, particularly sub-$5 million deals, has been instrumental in scaling the asset class and making it more accessible to accredited investors. By providing access to previously hard-to-reach investment opportunities, Percent has played a key role in reshaping the perception of private credit. Traditionally seen as illiquid, opaque, and exclusive, the private credit market is now viewed as a dynamic and viable investment option, thanks in large part to Percent’s data-driven approach.

Since its inception, Percent has onboarded over 100 borrowers, more than 20 underwriters, and nearly 45,000 investors. The platform’s impressive track record includes 16 consecutive months of net asset under management (AUM) growth, demonstrating its increasing success and the growing demand for private credit opportunities. Building on this momentum, Percent plans to expand its asset-based financing offerings, introduce new investor resources, and further diversify its private credit offerings in 2025.

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