Why mid-market CFOs are rethinking their mix of bank and private capital.

For decades, bank lending defined the playbook for corporate financing. When a business needed capital, the route was predictable: secure a revolver, approach a syndicate, issue a bond. But that playbook is being rewritten—quietly, steadily, and globally. Private credit, once a quiet corner of alternative lending, has grown into a $1.6 trillion industry and is on pace to surpass $2.5 trillion by 2028.

Private lenders now sit alongside banks and institutional investors at the decision-making table, shaping how companies fund expansion, manage liquidity, and structure risk. And as we move into 2026, the most visible impact of this shift is happening in the middle market, where most of America’s business growth actually happens.

The rise of private capital

Private credit (or private debt) refers to loans and leases made directly to companies by non-bank lenders. These deals are privately negotiated, often tailored to the borrower’s specific project or cash flow. The model gained momentum after the 2008 financial crisis, when banks tightened underwriting standards and new capital requirements made many loans less attractive to hold.

Since then, private credit has expanded at an average annual rate of about 14%. Direct lending now makes up roughly a third of the market. The appeal is clear: for investors, private credit offers attractive yields and stable performance. For borrowers, it offers something even more valuable: speed and structure flexibility.

The pandemic years and subsequent rate volatility only accelerated this trend. As banks pulled back and cost of capital rose, CFOs and treasurers began prioritizing execution certainty and flexible terms over the absolute lowest rate. The result is a fundamental shift in how companies think about financing: not as a transaction, but as a strategic partnership.

Why mid-size businesses are at the center of it

Mid-market companies—typically those with $50 million to $1 billion in annual revenue—have become the core clientele of private lenders. These are the firms that are too complex for small-business programs yet too niche for the bond market. They’re also the ones that often need to move the fastest.

When a logistics company needs to expand its fleet to meet new contract demand, it can’t wait three months for loan committee cycles. When a manufacturer wants to upgrade automation equipment, it needs financing that can cover hard assets and the “soft costs” like installation, freight, or integration. When a healthcare group sees a roll-up opportunity across multiple practices, it needs capital that flexes with acquisition timing, not one fixed line.

These are all scenarios where private capital has stepped in. It’s not replacing the banks but complementing them. Many CFOs now structure their stack intentionally: banks for working capital and revolvers; private lenders for asset-based, equipment, or expansion projects that require tailored terms or faster turnaround.

The shift for finance leaders

For corporate finance teams, the growing role of private credit presents opportunity. It’s no longer enough to view lending options through a single lens of rate spreads. Instead, the focus moves toward total value: how financing structure supports timing, flexibility, and long-term resilience.

CFOs are asking sharper questions:

• Does this capital structure match our asset life and cash-flow profile?

• How does it impact our liquidity position and covenants downstream?

• Can we preserve bank capacity for future needs while still moving on current growth opportunities?

Private credit gives CFOs a wider playbook. Term loans can be structured with step payments, seasonal adjustments, or balloon residuals that align with revenue patterns. Lease structures can free up bank lines for payroll or operating expenses. For some companies, it’s about unlocking capital from existing equipment to reinvest elsewhere without diluting equity or giving up control.

In short, flexibility has become a financial advantage in itself.

A new normal for corporate finance

The steady rise of private capital signals more than an investor trend. It’s a realignment of who sets the terms for business growth. As regulation continues to shape bank lending and as companies demand faster, more bespoke funding solutions, private credit’s role in the financial ecosystem will only deepen.

For CFOs, the takeaway isn’t to abandon traditional lenders. Banks still provide relationship continuity and low-cost capital for core operations. Private capital provides the agility to seize opportunities without disrupting those relationships.

Together, they form a capital stack that’s more adaptive and more reflective of the real world businesses operate in.

Looking ahead to 2026

By 2026, private credit will likely cross another trillion-dollar milestone and become a standard component of mid-market finance.

The question for finance leaders isn’t whether private capital will continue to grow. It’s how their own capital strategy will evolve alongside it.

The edge will come from mastering the mix of speed, structure, and stability that keeps growth moving—no matter which way the market turns.