Percent, a platform powering the modern private credit marketplace, released its 2025 Private Credit Outlook. This annual report highlights how private credit is one of the most resilient and dynamic asset classes in global finance, nearing $2 trillion in market size. Amidst macroeconomic shifts seen in 2024 – from the Federal Reserve’s cautious rate cuts to a contentious U.S. presidential election and heightened, evolving geopolitical tensions – private credit has demonstrated unparalleled adaptability, resilience and strength, with Percent seeing its gross returns, after losses, hold steady at 14.6%. This steadfast performance has positioned the asset class for accelerated growth in 2025.
“Last year demonstrated how private credit keeps delivering, even when the market throws curveballs,” Nelson Chu, founder and CEO of Percent, said. “As we enter 2025, banks’ entry into private credit signals the asset class’s resilience and appeal. Yet, the lower middle market remains a largely untapped frontier, where financing gaps left by traditional lenders are most pronounced. This segment offers a unique opportunity to diversify portfolios, provide inflation protection, and unlock value in ways that larger players can’t replicate. It’s here, in this underserved space, where private credit will not just hold its ground, but thrive.”
According to Percent’s 2025 Private Credit Outlook Report, key trends shaping private credit will include:
- Asset-Based Financing Expansion: Asset-based financing, such as merchant cash advances, trade receivables and equipment loans, is poised for significant growth, offering enhanced collateral protection for investors and more favorable financing terms for borrowers.
- Continued Direct Lending Growth: Direct lending, including senior debt, mezzanine financing and unitranche loans, will remain a key driver as institutional investors recommend an increase in allocations to alternatives.
- Fed Policy Easing: Continued rate cuts by the Federal Reserve are expected to bolster private credit’s appeal, as investors shift from public bonds to higher-yielding private credit assets that provide a built-in hedge against inflation and market rate volatility.
- Increased Private Credit Diversification: Investors will seek broader segmentation across deal types, company sizes and geographies to optimize risk-adjusted returns in both developed and emerging markets.
- Advancements in Technology and Transparency: Digital platforms and data-driven underwriting will continue to enhance transparency, efficiency and access to high-quality deals.
