PRIVATE CREDIT STRENGTHENS SMALL BUSINESSES
The AIC is the premier trade association for private credit in Washington ¨C representing over 2/3 of the industry. Private credit provides financing directly to businesses. It has become a valuable alternative to traditional lending from banks, especially for small- to medium-sized businesses that often do not qualify for loans from traditional banks or need capital beyond what banks are willing to provide. EY recently prepared a report for the AIC that details how private credit supports small businesses, jobs, and investors across America. Please scroll down and learn how private credit is helping businesses and the economy.Get The Facts Read The Report
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Hear From Small Business Leaders
Entrepreneurs and business owners speak about how private equity has strengthened their businesses.
$500B
in private credit has been invested inmore than 3,600 businesses acrossAmerica
1.6M
jobs are supported by private credit in2022, earning $137 billion in wages andbenefits
150
employees, is the size of the mediancompany receiving private credit
What is the Impact of Private Credit
on the U.S. Economy?
How Does Private Credit Work?
Businesses depend on two main sources of outside funding: credit and equity. Private credit, like private equity, helps strengthen and scale businesses of all sizes. But instead of owning part of a company, as private equity funds do, private credit loans provide an alternative to traditional bank lending and can be tailored to the specific needs of the borrower. Companies of all sizes and sectors receive private credit loans, including healthcare, infrastructure, technology & IT, and more.
Small & Medium
Businesses
benefit from individually tailored loan structures that banks are unable to extend and from loan providers that are committed to the success of the company.
Workers
benefit from stronger companiesthat have capital to invest in them.
Investors
gain from higher returns and lessvolatility than public markets.
Who Benefits From Private Credit?
Private credit benefits companies, workers, and investors:
Small & Medium
Businesses
benefit from individually tailored loan structures that banks are unable to extend and from loan providers that are committed to the success of the company.
Workers
benefit from stronger companiesthat have capital to invest in them.
Investors
gain from higher returns and lessvolatility than public markets.
Who Benefits From Private Credit?
Private credit benefits companies, workers, and investors:
Provides analternative source offunding
for smal businesses who do notqualify for loans from traditionalbanks or need capital bevond whatbanks are willing to provide.
Offers loan structures that are individually tailored
to fit the businesses' needs, whichis especially important duringperiods of economic downturns orwhen other lenders pull back.
Delivers quick accessto funding
Businesses are able to quicklyaccess funding from private creditinvestors who care about the
success of the companies.
Deploys capital
countercyclically
and through hard times. Wheneconomic downturns occur andtraditional banks pull back theirlending, private credit can continueextending credit to businesses
Provides a safe andstable funding
source
The private credit industry, is notsusceptible to "run risks" that canlead to financial crises
Provides access toexperienced
managers andinvestors
These executives take a hands-onapproach and offer ongoing
business mentorship and expertise
What Are the Benefits of Private Credit for Businesses?
How is the PrivateCredit IndustryRegulated
Private credit funds are well regulated by the U.S. Securities and Exchange Commission and are structured to prevent risk. A recent report from the U.S. Government Accountability Office found that private credit lending practices are appropriate and that the debt structure, documentation, and underwriting are robust and adequately protective of lenders. A recent report by the Federal Reserve concluded that private credit funds do not pose significant financial stability vulnerabilities.
