How non-bank private credit compares with traditional bank debt — and when each fits.
Bank debt is usually the lowest-cost option for straightforward, well-secured borrowing. Private credit is typically faster, more flexibly structured and higher-priced, and fits bespoke, time-sensitive or larger bilateral situations where bank appetite is constrained. Neither is universally better — the right route depends on the transaction.
| Factor | Bank debt | Private credit |
|---|---|---|
| Provider | Commercial banks | Specialist funds, family offices, private capital |
| Pricing | Generally lower | Generally higher |
| Speed | Slower, committee-driven | Often faster |
| Structuring | More standardised | Highly flexible, bespoke |
| Covenants | Often tighter, standardised | Negotiated case-by-case |
| Typical use | Core, well-secured needs | Acquisition, project, bridge, special situations |
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Weigh cost against speed, flexibility and certainty; consider tenor, security, covenants and the exit. Many transactions blend both across the capital stack.
Neither is universally better. Bank debt is usually cheaper for standard, well-secured needs; private credit offers speed and flexible structuring for bespoke or time-sensitive situations.
Yes — many transactions combine senior bank debt with private credit or mezzanine across the capital stack.
Private credit is usually faster: decisions sit with specialist funds rather than bank committees, and structuring is negotiated directly. On a well-prepared mandate a first term sheet is typically targeted within 30–90 days. Bank processes tend to be slower and more standardised.
Pricing reflects flexibility, speed and risk. Private credit lenders take on bespoke structures, tighter timelines and situations where bank appetite is constrained, and price accordingly. Borrowers accept the higher cost in exchange for certainty of execution, structuring freedom and speed.
Yes — a common path is to use private credit for a time-sensitive or bespoke phase, then refinance into lower-cost bank debt once the asset or business is stabilised and bankable. The credibility of that refinancing route should be tested before the original facility is signed.
Speak to a partner about how this applies to your transaction. A partner responds personally, typically within one business day.
