Redemption requests are exposing weak links in opaque private lending, while AI driven disruption adds uncertainty to fragile borrowers.
New York is feeling consumer pressure: rising fuel prices, higher prices for goods, and labor-market volatility are adding to the strain. In these conditions an unpredictable factor is emerging in the world of corporate finance that could affect a large portion of the economy.
This is about private credit – a broad concept of loans that operate outside the traditional banking sector.
Recently, investors in private credit have begun demanding the return of their investments, and their concerns have quickly spilled over to Wall Street: has the private lending sector become more dependent on high profitability and thus less prudent in borrower selection? And could the impact of artificial intelligence on software and society at large push small companies, which often rely on private loans, toward waves of defaults?
Clear answers are almost impossible – the private credit market, by its nature, is not public, and also because of the uncertainty that accompanies AI’s impact on technology and the economy as a whole.
Although debates about private credit are often framed as extremes – from excessive worry to potential financial catastrophe – for real consumers the consequences can be no less tangible than an anticipated financial crisis.
The Role of Private Credit in the Modern U.S. Economy
Despite differing views on the benefits or harms of private credit, it now accounts for a much larger share of the financial backbone than a decade ago.
After the 2008 crisis, banks became more cautious about lending, and small and medium-sized enterprises that did not meet higher standards sought financing from other sources. Thus private credit emerged – initially in the form of a few niche players that picked up the niche.
By 2026 private credit had become for many companies not just a last resort but a real savior: loans are often flexible and tailored to the specific needs of the business. Global assets under management by private credit have grown more than tenfold since 2007. Moody’s expects the assets under management in private credit to roughly double to $4 trillion by 2030.
If private credit mechanisms slow down, many companies could lose access to loans that help expand operations or avoid bankruptcy.
Will this break the $30 trillion U.S. economy? Probably not: although the use of private credit lines has grown, they still represent only a small share of total financial activity. Industry research indicates that American companies that attracted private investments directly employed about 811,000 people in 2024.
However, a credit crunch could also amplify other shocks – rising fuel costs, uncertainty about tariffs, and the overall persistence of inflation.
“The signs of stress we are seeing are a source of concern for the typical consumer.”
– Itay Goldstein
As with the discussion around artificial intelligence, the conversation about private credit has both supporters and skeptics.
Skeptics point to parallels with the pre-crisis period of 2008 – the excessive scrutiny of lending and the rapid rollout of unregulated debt instruments that allowed profit to be extracted from nothing. After the peak of the Covid-19 pandemic, the markets were flooded with money, lenders could have been too eager to issue loans to companies that are now facing hardship.
Opponents argue that these concerns are overstated: defaults on debt remain low, and recent efforts by companies to cut costs and curb investor buybacks – a common practice in illiquid markets to prevent a “bank panic” – are not unusual. Even if past sources of capital pointed to problems, private credit is still valued at roughly $2 trillion, while the U.S. public corporate bond market is about $13 trillion, so direct comparisons with the subprime defaults of the 2000s are incorrect.
Jamie Dimon, CEO of JPMorgan Chase, noted in his annual letter to shareholders that “private credit probably does not pose a systemic risk”.
He also stressed his confidence, answering analysts: “not particularly worried” about JPMorgan’s $50 billion exposure to private credit.
The International Monetary Fund also noted that the turbulence around private-credit giants such as Blue Owl Capital, Ares Management, and Blackstone appears limited with a possible “isolated systemic impact”.
Even the most skeptical expectations acknowledge that sooner or later lending may slow. And when that happens, losses in the private credit space could be more pronounced due to a lack of full transparency and standard loan pricing.
Ultimately, the share of private credit in overall U.S. financing has grown, and when the growth pace slows or stalls, small businesses with limited alternatives will feel the pressure.