There's a story that people think they know about private credit. After the 2008 global financial crisis, banks retreated from mid-market balance-sheet lending. Direct lenders stepped in. Managers raised capital, deployed it against the future cash flows of corporate borrowers, and built an asset class that allocators could use as a portfolio diversifier and alternative to fixed income. That placid situation was the baseline expectation for almost 15 years.

Recent headlines have added a wrinkle to the story. Most of the coverage has centered on stories of credit stress or defaults. They feed a narrative about the start of something larger, immediately. And that criticism comes easily because private markets are, by nature, private. You don’t know what you cannot see, which makes it seem like something’s crawling beneath the surface.

Both stories are incomplete. What we’re seeing in the market is private credit becoming more like economic plumbing. It provides pipes that help capital flow efficiently for businesses and consumers, financing everything from incidental purchases to apartment remodels. You could say the same mechanism that funds a donut shop transaction using buy now, pay later (BNPL) also sits in the capital stack for data centers, touching borrowers across the entire spectrum.

Donuts: private credit in everyday purchases

Consumer credit runs on private rails most shoppers never see. BNPL platforms, credit cards, auto loans, student debt, mortgages, traditional home equity lines of credit (HELOCs), and innovations like home equity investments in future appreciation all involve private credit in some form. Sometimes the loans are bundled and securitized (e.g., CLOs, asset-backed securities, and other asset-based finance (ABF) structures). Sometimes they are funded directly by private lenders.

This model works because underwriters develop expertise in specific consumer categories. They know the risk profiles of BNPL borrowers versus home equity tappers, student borrowers versus auto buyers, etc.

Each loan box is defined with precision, with its own parameters, data, and underwriting logic. When fintech platforms originate to these specifications, private credit providers commit capital against forward-flow agreements. As long as the loans fit the mold, the capital keeps flowing.

What’s new is that private credit is now financing small, frequent, and often invisible consumer transactions. For example, the total transaction value of BNPL has grown roughly 20% a year, reaching $70 billion in 2025, according to Fed data.ⁱ The fintech platform handling a BNPL checkout is likely funded by a private credit commitment. The same goes for other fintech innovations like home equity investment products that offer homeowners cash without a monthly payment.

These privately funded credit products are so much in the mainstream that the average consumer doesn’t see them. Behind the scenes, a private credit firm might commit $1 billion over 24 months against a defined loan box. Arrangements like warehouse lines, forward-flow agreements, and diversified capital partnerships provide the plumbing underneath.

The connective tissue: origination platforms and ABF

The expansion into ABF is where the addressable market opens up. Oliver Wyman estimates the US ABF market at $5.5 trillion, with private credit accounting for less than 5%.ⁱⁱ It’s the least penetrated and potentially largest opportunity for private credit to span from donuts to data centers.

But credit card receivables or consumer loan portfolios are different because they generate cash flows from payment streams. They don’t have hard assets tied to collateral. It forces private credit funders to develop expertise in specific asset classes while originators build the underwriting models and servicing relationships for each collateral type, all fueled by data.

A corporate direct lender might track covenants for a few dozen borrowers. A consumer fintech platform generates thousands of transactions daily, each with its own payment history, risk characteristics, and performance metrics. The private credit funders behind these platforms need systems that can aggregate across massive pools while retaining enough granularity to spot problems early.

That balance between scale and precision becomes the operational challenge as private credit moves deeper into everyday finance.

Data centers: private credit at the infrastructure and mega-capex endpoint

At the high end of the spectrum, data center construction is accelerating faster than traditional financing channels can absorb. The US alone could see annual spending exceed $900 billion by late 2027, according to Fed research.ⁱⁱⁱ

These facilities require financial speed, scale, and bespoke terms that don’t fit bank lending boxes. On deal size alone, hyperscale developments demand upfront capital in the hundreds of millions of dollars. Private credit has moved from the margins to the center of this capital stack. A typical arrangement might involve 35-45% equity investment for core development costs, supplemented by 55-65% debt financing for equipment and infrastructure.^iv

For example, in July 2025, Reuters reported that Meta is looking to raise $3 billion in equity and $26 billion in debt to create a capital stack for its data center initiatives. Reported participants included Apollo Global Management, KKR, Brookfield, Carlyle, and PIMCO.^v

That’s not just one extreme example. Private credit loans to AI-related companies have grown from near zero to over $200 billion today, representing roughly 8% of total private credit volumes, according to a recent Bank for International Settlements report.^vi

The shift shows the fit for private credit. Projects generate asset-heavy cash flows with contracted revenues from creditworthy tenants. They require tailored structures that blend construction financing, mezzanine layers, and permanent capital. Private credit managers can assemble these stacks with more flexibility than traditional lenders.