For the past three months, the financial press has been writing about private credit as though the apocalypse is imminent. Redemption gates, illiquid assets, SaaS exposure, shadow banking lurking just outside the regulatory perimeter. If you’ve been following the coverage, you might think the entire $1.7 trillion industry is on the verge of collapse. It isn’t. But that doesn’t mean nothing is happening, and getting those two things straight is the whole point of this article.
I spent the past week speaking with four people who live inside this market every day: a veteran investment manager who has been doing asset-backed finance for nearly 20 years, a marketplace operator sitting between originators and investors, a fintech CEO who raises capital directly from some of the firms being written about, and a practitioner who came up through consumer lending platforms and now provides curated private credit access. I also include some commentary from Jamie Dimon in JPMorganChase’s Q1 2026 earnings call, where he addressed private credit directly and at length. What they told me is more nuanced, and ultimately more accurate, than the current narrative.
The Problem is Visible, Not Vast
Let me start with what the press got wrong. Jason Brown, Senior Partner at Victory Park Capital, a firm that has been doing asset-backed lending for close to 20 years, was direct when I pushed him on the actual scope of the problem.
“It’s a massive market and in my mind there’s certainly not a broader issue,” he said. “It’s an isolated issue in a variety of select deals that have just been publicized. You would think that you could say 40 names of deals that are having issues, but it’s just a handful of names really.”
Jeff Andrews, CRO at Edge Focus, a technology-enabled private credit firm that sits at the intersection of consumer lending platforms and private credit investors, described the underlying market the same way. “Private credit remains fundamentally strong,” he told me. “Most creditors remain in a position where they have the ability to pay back on the credit that’s been floated to them. Underwriting discipline over the course of the expansion of private credit has generally speaking remained strong.”
So how did we get here? Prath Reddy, president and co-founder of Percent, a private credit marketplace, gave me an interesting framing. “Private credit has this almost like a public tip of the iceberg,” he said. “It’s the select group of managers across select funds that have gotten so big where they had to start accessing retail capital through semi-liquid vehicles. Of course, that’s the most visible tip of the mountain that everyone can see. If that starts having some cracks or seeing some redemptions, everyone thinks that everything underneath that is also under stress. But it’s just not the case.”
Sold, Not Bought
There is a legitimate story inside the noise, and it’s about the push into retail. A portion of the private credit industry deliberately packaged illiquid assets into BDCs and interval funds, placed them through advisor networks, and relied on large wholesaling forces to move product. The assets were mostly fine. The mismatch came when investors either weren’t told clearly, or didn’t read, what they were getting into.
Andrews was frank about how this happened. “These are sold, not bought,” he told me, describing advisor networks offered above-market yield promises and, let’s be honest, the occasional round of golf. “That said, this can be useful and above-market yielding exposure for retail investors. The danger is when you create this asset-liability mismatch in terms of duration.”
Reddy made the structural critique precise. “It became the story that it is today because managers decided to target retail,” he said. “And every time that you target retail, you’re under greater scrutiny from the regulators, and you’re under greater scrutiny from public opinion.”
The mechanics deserve attention. Interval funds with 5% quarterly redemption gates are sensibly designed for long-duration assets. But Reddy isn’t sure some managers fully thought through what happens when the stress is sustained. “Whether or not they can continue to satisfy that gate every single quarter is an open question,” he said. “For a prolonged period of time most managers weren’t necessarily thinking about all the different types of liquidity levers they may need if they are going to get hit with five percent redemptions every single quarter for the next three years.”
That’s not fraud. That’s a structural problem compounded by insufficient investor education. Important distinction.
The SaaS Concern: Real But Not Systemic
The one area where the criticism has genuine foundation is SaaS exposure, and I want to be direct about that rather than wave it away. A meaningful number of private credit funds, particularly the larger BDC-focused players, made significant loans to software companies at valuations built on assumptions that AI disruption has since destabilized. Some of those loans face hard refinancing conversations.
Reddy didn’t soft-pedal it. “Some of the strategies out there from household name managers that are overweight or lean more heavily towards SaaS, there is a valid concern,” he told me. “Whether or not they will perform as expected, whether or not they’re going to see defaults and write-offs, that’s going to play out over the next several years.”
The problem is that nobody can agree on how big the exposure actually is, which is part of what’s keeping the fear alive. Prashant Fuloria, CEO of Fundbox, flagged a recent
Wall Street Journal analysis showing that software exposure across many funds is larger than formally reported, because categorization is inconsistent across managers. Healthcare SaaS gets filed under healthcare. Logistics software under transportation.
“The noise is amplified by the lack of transparency,” he said.
Andrews put a rough estimate on the total: “We’re probably talking somewhere in the neighborhood of maybe 10, low end, 20% high end, of private credit dollars.” Even at the high end, you’re talking about $340 billion in an asset class that sits alongside $13 trillion in investment-grade debt. Painful for specific funds. Not systemic.
Brown’s firm has no SaaS exposure at all. “We are not in the software space,” he said.
A large portion of the industry isn’t. Andrews’ honest read on what’s coming was the most useful framing: “There is going to be a wall of refinancing and therefore probably a mark-to-market reckoning with some of these loans. I just don’t think it’s apocalyptic.”
What Dimon Actually Said
In his Q1 2026 earnings call Jamie Dimon said there has been “some weakening in underwriting, and not just by private credit, elsewhere.” Yes,” he said a credit cycle is coming and “losses will be worse than people expect relative to the scenario.” But he was equally explicit when asked directly whether a default cycle in private credit would be systemic.
“I don’t think it’s systemic,” he said. “It almost can’t be systemic at that size relative to anything else. You have to have very large losses in private credit before it even looks like banks are going to get hit.” He put the $1.7 trillion private credit figure in context alongside $1.7 trillion in high-yield bonds, $1.7 trillion in bank syndicated leveraged loans, $13 trillion in investment-grade debt, and $13 trillion in mortgage debt. The math doesn’t support a systemic narrative.
Where Dimon was pointed, and I think he’s right, is on what a credit cycle will reveal about quality. “People are going to be surprised that some of the players aren’t particularly good at it,” he said. “And that business will probably come back to banks.”
While some business may flow back to banks, it is the established players, both banks and non-banks, who will likely benefit.
The Flight to Quality Is Already Happening
Fundbox deploys capital to small businesses through warehouse facilities with partners including Blue Owl Capital and Atlas SP Partners, and so has an informed perspective on the current market environment. Fuloria’s read on the moment is the most useful framing I’ve encountered.
“When there’s a lot of noise and uncertainty, I think there is a flight to quality,” he told me. “From all perspectives. The investor side, the borrower side, the lender side.
Everyone is going to try to work with the partners who have the most durability, who can make their way through any volatility.”
This is good news for established operators and genuinely harder news for everyone else. Brown told me Victory Park’s “pipeline right now is as large as it’s ever been, with the most deals in execution at one time as I can remember.” He described “a slight flight to quality where we are winning deals because we are a known commodity, we’ve been around, we’ve acted a certain way.” Experience is getting rewarded. That matters.
But Fuloria was clear-eyed about what’s happening to newer entrants. “If you’re a new fintech looking to raise your first financing, you may have a more difficult time getting capital at good terms,” he told me. “Because the industry may be on the defense right now.”
Reddy gave me the pricing confirmation. “Rates have generally ticked up probably one to two percent,” he said, reflecting investor caution on his platform. Even high-performing borrowers with clean track records are refinancing at higher rates simply because investor appetite has contracted. That’s a real consequence. Not catastrophic. Real.
Demand Isn’t Going Anywhere
Here is the thing the negative headlines keep missing. The demand for private credit capital hasn’t changed at all. The structural gap that created this industry, the massive financing need that banks don’t fill and won’t fill, is still there.
Reddy was unambiguous. “The demand is insatiable,” he said. “They are looking for capital under every rock out there. Right now it’s a king-of-the-hill game. Everyone’s looking for dedicated, committed capital sources to fuel Main Street.”
Andrews made the structural point about why this matters beyond the current noise cycle. “If everything got run by the banks, there would be so little credit available to the nonprime US consumer that it would be a complete and utter mess,” he told me.
“Economic growth, economic spending would go through the floor. You cannot leave this all to the lowest cost of capital providers of credit, because there’s a massive portion of the American consumer they just can’t serve.”
Fuloria echoed him from the small business side, which is where I think the story is most concrete. “Demand for capital at the small business level remains as strong as ever,” he said. “We see this every day. Because the gap between demand and supply is so large, there is, for the foreseeable future, very significant demand that is going unfilled right now.”
The capital needs are real. The borrowers are real. The industry that serves them isn’t going away.
What This Actually Is
When I look at everything I heard this week, including Dimon’s framing from the vantage point of the largest bank in the country, one conclusion keeps coming back to me: this is a repricing and a shakeout, not a crisis.
Andrews framed it as well as anyone. “It’s a healthy shakeout,” he told me. “It drives you to continue to be responsible, create durable performance, not optimize yourself for any single situation, but instead be ready to underwrite and create returns through the cycle.” Reddy called it “a catalyst for innovation.” Brown said we’ll look back on it as a small blip in the context of a large and still-growing industry. Fuloria said it will improve transparency and investor sophistication across the board.
I think they’re all right. Private credit grew fast, attracted players who lacked the track record to back their ambitions, brought retail capital into structures not everyone fully understood, and accumulated some exposure to sectors that look riskier in a world where AI can replicate in weeks what used to take years to build. None of that is apocalyptic. All of it is worth working through.
The credit cycle Dimon is certain is coming will do the final sorting. When it arrives, the firms that built durable performance through discipline will look very different from the ones that optimized for a single market environment. That gap is already widening.
That’s not something to fear. That’s exactly how a maturing market is supposed to work.
