A trillion dollars looking for borrowers

The global private-credit market reached $3.5tn in assets under management by the end of 2025, with Europe accounting for close to 30% and roughly $1tn sitting undeployed. For a company looking to raise £3–15m in the UK, the trillions are only context. What they do on the ground is create measurable competition for good credits at the smaller end, and that competition is the borrower’s to use.

What does $3.5 trillion actually mean?

The $3.5tn AUM figure, published in December 2025 by the Alternative Credit Council, is the ACC’s estimate of the total global private-credit market: direct lending, infrastructure debt, asset-backed credit and adjacent strategies combined. It is a market-sizing estimate and the methodology has shifted across editions, so it is best read as a directional benchmark rather than a precise census. The number the ACC can track with more precision is annual deployment by the managers it surveys: fresh capital actually put to work each year.

That series tells a starker story. Surveyed managers deployed $196bn in 2020, held broadly flat through 2021–22 at around $200bn, then stepped sharply upward: $333bn in 2023 and $592.8bn in 2024, a 78% increase in a single year. The rate shock that froze syndicated markets barely registers as a pause.

Where does $1 trillion of dry powder go?

Undeployed capital in a private-credit fund is not neutral. Managers raise capital against commitments, charge fees during the investment period, and hold deployment targets that inform how they are remunerated. Around $1tn sat undeployed at end-2025, a figure the ACC confirmed alongside the global AUM headline. That is a structural bias toward putting money to work. The bias shows up as competition between managers for the same good credits, which translates into pricing, covenant packages and tenor that a borrower who runs a proper process can use as leverage.

The ACC survey makes the downstream direction explicit: 68% of respondents said they planned to increase their lending into the SME and mid-market segment, even acknowledging some sense of saturation at the larger end of the private-credit market. UK bank coverage has always been thinnest in the lower-mid-market, and that is where the incremental appetite tends to find its way.

Does the demand side hold up?

A borrower’s ability to absorb debt matters as much as the supply of it. The Bank of England’s financial stability data gives a useful read: on its net debt-to-earnings measure, UK corporates entered 2025 at levels well below the post-GFC peak of about 230% and the Covid peak of about 166%. The ratio ticked up in 2025 Q2 to 134% as net debt rose slightly, but it remains near the lowest reading in a generation.

The BoE’s net debt-to-earnings series covers UK corporates broadly, not the lower-mid-market specifically. Private-credit borrowers, who tend to carry higher leverage multiples than the corporate average, will sit above this line. Read it as a macro backdrop: the direction is the useful signal, not the absolute level.

For a borrower at the £3–15m facility level, the conjunction matters. Supply is abundant and lenders need to deploy. Borrower balance sheets are, on average, in better shape than at any point since before the financial crisis. That combination of pressure to lend and reasonable credit quality tends to favour a borrower who enters the market with a tight credit story and a competitive process rather than one who takes the first term sheet that arrives.

The practical implications for a UK borrower

Three things follow. First, the range of lenders reachable for a £3–15m credit has never been wider. UK private-credit outstanding has grown from near-zero in 2013 to £59.5bn in 2024, while challenger and specialist banks now supply around 60% of new bank lending to smaller businesses. Treating the high-street relationship as the default leaves the majority of that supply unsearched. Wider does not mean cheaper everywhere: cost rises toward private credit, the expensive end of the range, which earns its place when cheaper sources decline or cannot do the structure.

Second, the gap between a negotiated outcome and a relationship default widens in a deep supply market. When funds are competing to deploy into the same credit, the margin between what the first lender offers and what a proper process extracts is at its greatest. That is the return to running a competitive process, and it is widest exactly when supply is most abundant.

Third, the dry-powder dynamic has a shelf life. Capital raised in 2022–24 carries investment periods of typically four to five years; by 2027–28 the oldest tranches begin approaching the end of those windows. The window in which $1tn of pressure sits behind the supply is open now, not indefinitely.