Direct Lending Primer

June 2026

Direct lending refers to debt financing provided by a non-bank lender directly to a corporate borrower, without the involvement of an investment bank or loan syndicator.

Transactions are bilaterally negotiated, leading to customized loan terms and structures. As a result, they are not freely traded in secondary markets. The borrower is typically a middle market company, defined here as a business middle market company, defined here as a business with EBITDA between $25 million and $150 million a year. Direct lending is the largest sub-strategy within the broader private credit universe, which also encompasses asset-based lending, special situations, and opportunistic credit strategies. This paper focuses on how institutional investors access direct lending.