Fed Research Puts U.S. Private-Credit Loans to Businesses at Nearly $1.5 Trillion

Federal Reserve researchers estimate that private-credit lenders had about $1.458 trillion of loans outstanding to U.S. businesses at the end of 2025, putting the market close to the $1.5 trillion mark and giving policymakers a more complete view of how much credit is being supplied outside the traditional banking system.

The estimate comes from an October 16 FEDS Note, “Introducing Private Credit into the Financial Accounts of the United States”, which for the first time integrates private credit into the Federal Reserve’s Financial Accounts framework. The paper defines private credit as privately negotiated business loans originated by nonbank investment funds rather than by banks and says the change helps users track the full chain from investors to lending vehicles to borrowers.

The headline number deserves a little unpacking. The roughly $1.5 trillion figure refers specifically to private-credit loans to U.S. businesses as of 2025:Q4. The broader stock of loans held by private-credit vehicles was even larger at $1.628 trillion, because that total also included lending to foreign borrowers and other loans and advances. Total financial assets held by private-credit vehicles reached $2.661 trillion.

That matters because private credit has moved from a niche source of funding to a material part of U.S. business finance. For years, the Financial Accounts captured much of the borrowing on the liability side of business balance sheets without separately identifying the lenders or the instruments as private credit. The new work fills that gap by combining confidential SEC Form PF data with other sources to build balance sheets for private debt funds and other private-credit vehicles.

Private credit has expanded far beyond its post-crisis niche

The Fed paper shows just how quickly the market has scaled up. Total financial assets of private-credit vehicles rose from roughly $350 billion in 2012 to more than $2.6 trillion by the end of 2025. Over the same period, private-credit loans to U.S. businesses climbed from around $120 billion to about $1.46 trillion. The largest pieces of the market are private debt funds and business development companies, though middle-market collateralized loan obligations, interval funds and tender offer funds have also grown.

The report says most borrowers are middle-market nonfinancial businesses that use private-credit financing for acquisitions, growth capital or refinancing. That description fits the market’s long-running appeal: borrowers often get speed, flexibility and customized terms, while lenders and investors get exposure to a segment of corporate credit that can offer higher yields than more standardized public markets.

Borrower composition in the Fed’s new framework also helps clarify where the credit is actually going. The paper says most private-credit borrowers are U.S. nonfinancial businesses, and it estimates that nonfinancial corporate businesses alone owe roughly $1.1 trillion in private-credit loans. Within that total, about $622 billion was borrowed from private debt funds, $341 billion through business development companies, $57 billion through interval and tender offer funds, and $69 billion through middle-market CLOs. Nonfinancial noncorporate firms, other financial businesses and foreign borrowers account for the remainder.

The breakdown by lending vehicle is useful because private credit is not a single pool of money. Domestic private debt funds accounted for $498 billion of private-credit loans to the U.S., while business development companies accounted for $456 billion. Foreign private debt funds added another $335 billion, with smaller contributions from interval and tender offer funds, domestic middle-market CLOs and foreign middle-market CLOs. Looking only at U.S.-domiciled vehicles, the paper says the Fed constructed comprehensive balance sheets covering about $1.1 trillion in private-credit loan activity.

Why the new data changes the picture of business debt

The paper’s larger significance is not just that it measures a fast-growing market. It also changes how economists can analyze leverage in the business sector. As of 2025:Q4, private-credit loans accounted for about 6% of total debt of the nonfinancial business sector, up from around 1% in 2012. In the Fed’s table of business debt components, private credit sits alongside corporate bonds, mortgages, depository loans and other major categories rather than remaining hidden inside less-specific lines.

That reclassification raises measured business leverage, but not in a way that rewrites the overall story of the cycle. The researchers say including private credit makes the ratio of nonfinancial business debt to GDP around 5 percentage points higher in recent years than it would be otherwise. Even so, the broader trend still shows the ratio below its post-2012 median and generally declining since 2020. In other words, the addition is economically important, but it does not suddenly imply an entirely different macro picture.

For market watchers, that is a useful distinction. A new data series can sound like evidence of a newly discovered credit boom, yet the Fed’s finding is more measured. Private credit is large enough to matter for financial stability analysis and large enough that its omission left the Financial Accounts incomplete, but the new series mostly improves precision rather than overturning the direction of aggregate debt trends.

The work also gives analysts better insight into how nonbank lenders are interacting with more familiar parts of the credit system. Middle-market CLOs, for example, issue securities backed by loans to middle-market companies, and the paper notes that those loans are often originated by direct lenders such as private debt funds, BDCs and affiliated asset managers. Integrating those relationships into the Financial Accounts should make it easier to map transmission channels if stress emerges in a downturn.

The revision also matters for households and the wider financial system

The Fed note says the integration of private credit improves more than business-debt statistics. It also leads to more accurate measurement of household balance sheets. Under the previous treatment, some assets were effectively misattributed to households because private-credit vehicles were not fully represented in the accounts. Conversely, direct household holdings of private debt fund shares and related exposures could be understated. By adding both the lending vehicles and the relevant instruments, the Financial Accounts now better reflect households’ direct and indirect exposures to private credit.

That is especially important because private credit is not funded only by specialist institutional investors. Household exposure can come through pension entitlements and other investment channels, so a better accounting of the sector should make it easier to assess how developments in private credit might feed through to broader wealth measures and, in turn, to financial stability analysis.

The change also brings the Fed’s flagship balance-sheet framework more in line with how modern corporate finance works. Banks remain critical lenders, but a growing share of credit intermediation now takes place through investment funds and structured vehicles. The Financial Accounts are meant to describe the economy’s flow of funds comprehensively, and the authors argue that integrating private credit makes the framework more useful for tracing those links.

For investors and policymakers, the immediate takeaway is straightforward. The Fed now estimates that private-credit vehicles hold roughly $1.46 trillion of loans to U.S. businesses and $2.66 trillion of financial assets overall. That does not mean all of the risk is new, but it does mean the scale of the market is now easier to see, compare and monitor. As private credit keeps expanding, the improved data should help analysts judge not only how much lending is taking place, but also who is funding it, who is borrowing it, and how much of the corporate credit system sits outside the banking sector.