Competence in private credit is built through repetition. The frameworks in this guide are meant to become a standing process rather than a one-time read.

Four of the tools in this guide are designed to be used directly: the liquidity budget and gate test in Chapter 6, the three documentation items in Chapter 7, the 12-point manager checklist in Chapter 10, and the monitoring metrics table in the same chapter. A firm that adopts them as a standing process starts every future private credit evaluation with documented discipline rather than a blank page.

Continue the education. BIP Capital publishes ongoing analysis of private market structures and practices on its Insights page, written for advisors working through these questions in real client portfolios.
Read the companion volume. The Complete Guide to Private Equity for RIAs addresses the growth side of the same platform question. Read The Complete Guide to Private Equity for RIAs.
Attend an educational webinar. BIP Capital hosts advisor-focused sessions on private market structures and fund mechanics, with the opportunity to ask practitioners questions.
Practice with real documents. Take any sponsor's fund overview, from any manager, and test it against Chapters 2, 4, 7, and 10. The exercise is more instructive than any summary.

The best next step is the next question.

Key takeaway: three things to do this quarter

Build the gate test into your standing liquidity review. Adapt the 12-point checklist for your firm's due diligence file. Pull one fund's most recent Rule 19a-1 notice and read where the distributions came from. Each is educational, and none is an invitation to invest.

Sources

Federal Reserve Bank of Boston, "Could the Growth of Private Credit Pose a Risk to Financial System Stability?" Current Policy Perspectives, 2025. https://www.bostonfed.org/publications/current-policy-perspectives/2025/could-the-growth-of-private-credit-pose-a-risk-to-financial-system-stability.aspx
Board of Governors of the Federal Reserve System, "Private Credit and Leveraged Loan Markets: Similarities, Differences, and Substitution," FEDS Notes, August 11, 2026. https://www.federalreserve.gov/econres/notes/feds-notes/private-credit-and-leveraged-loan-markets-similarities-differences-and-substitution-20260811.html
Cerulli Associates, The Cerulli Report: U.S. Private Markets 2026, Scaling Retail Access. https://www.cerulli.com/reports/us-private-markets-2026
Board of Governors of the Federal Reserve System, "Private Credit: Characteristics and Risks," FEDS Notes, February 23, 2024. https://www.federalreserve.gov/econres/notes/feds-notes/private-credit-characteristics-and-risks-20240223.html
With Intelligence, analysis of BDC portfolios: redemptions, NAVs and credit stress, 2026. https://www.withintelligence.com/insights/what-is-actually-going-on-in-bdc-portfolios/
Board of Governors of the Federal Reserve System, Financial Stability Report, May 2026, Funding Risks. https://www.federalreserve.gov/publications/2026-may-financial-stability-report-funding-risks.htm
Cambridge Associates, "A New Era of Dispersion in Direct Lending Favors Disciplined Managers," April 2026. https://www.cambridgeassociates.com/insight/a-new-era-of-dispersion-in-direct-lending-favors-disciplined-managers/
Bank for International Settlements, "Financing the Digital Economy: The Role of Private Credit," BIS Quarterly Review, September 2026. https://www.bis.org/publications/qr-202609/financing-digital-economy-role-private-credit
PitchBook LCD, US Private Credit Monitor and Global Private Credit Survey, 2025-2026. https://pitchbook.com/news/reports
McKinsey & Company, "Private Credit in 2025: A Maturing Industry Navigates Change," Global Private Markets Report 2026. https://www.mckinsey.com/industries/private-capital/our-insights/global-private-markets-report/private-credit
Investment Company Act of 1940, Sections 54 through 65 (business development companies), as amended by the Small Business Credit Availability Act of 2018; Internal Revenue Code Subchapter M. https://www.sec.gov/investment/laws-and-rules
KBRA, "Private Credit: 2026 Outlook." https://www.kbra.com/private-credit
Fitch Ratings, analysis of perpetually non-traded BDC liquidity and leverage, 2026. https://www.fitchratings.com/
U.S. Securities and Exchange Commission, Rule 2a-5 under the Investment Company Act of 1940, Good Faith Determinations of Fair Value. https://www.sec.gov/rules-regulations
U.S. Securities and Exchange Commission, Rule 206(4)-1 under the Investment Advisers Act of 1940 (Marketing Rule) and staff Marketing Compliance FAQs, March 2025. https://www.sec.gov/investment/marketing-compliance-frequently-asked-questions
U.S. Securities and Exchange Commission, staff observations on closed-end fund distribution practices and Rule 19a-1 notices. https://www.sec.gov/investment/laws-and-rules
U.S. Securities and Exchange Commission, Division of Examinations, Fiscal Year 2026 Examination Priorities. https://www.sec.gov/exams
Financial Stability Board, Report on Vulnerabilities in Private Credit, May 6, 2026. https://www.fsb.org/uploads/P060526.pdf
Isil Erel, Thomas Flanagan and Michael S. Weisbach, "Risk-Adjusting the Returns to Private Debt Funds," NBER Working Paper 32278. https://www.nber.org/papers/w32278
Gregor Matvos, Tomasz Piskorski and Amit Seru, "Private Credit Balance Sheets and Financial Stability," NBER Working Paper 34991. https://www.nber.org/papers/w34991
PitchBook LCD, analysis of payment-in-kind interest income at exchange-traded BDCs, 2025-2026. https://pitchbook.com/news/articles/pik-interest-income-at-bdcs-falls-for-3rd-straight-quarter-as-schism-appears
Fitch Ratings, US Private Credit Default Rate, August 2026. https://www.fitchratings.com/
KBRA DLD, Direct Lending Deals Index and Middle Market Monthly Pulse, 2026. https://www.kbra.com/private-credit
Fitch Ratings, Privately Monitored Ratings default event analysis, first quarter 2026. https://www.fitchratings.com/
KBRA, "Private Credit: Business Development Company (BDC) Ratings Compendium: Second-Quarter 2026," September 3, 2026. https://www.kbra.com/publications/QrvqqBVr
Moody's Ratings, BDC sector outlook revision, April 7, 2026. https://www.moodys.com/web/en/us/insights/credit-risk/outlooks/private-credit-2026.html
S&P Global Market Intelligence, LossStats recovery data by lien position, cited in PitchBook LCD analysis. https://pitchbook.com/news/articles/private-credit-recoveries-in-focus
S&P Global Ratings, middle-market recovery study, Default, Transition, and Recovery series. https://www.spglobal.com/ratings/en/
International Monetary Fund, Global Financial Stability Report, April 2024 and April 2025, private credit chapters. https://www.imf.org/en/Publications/GFSR
Proskauer Tax Talks, analysis of the enacted One Big Beautiful Bill Act, July 2025; confirm against enrolled statute text at congress.gov. https://www.proskauertaxtalks.com/2025/07/president-trump-signs-one-big-beautiful-bill-act-into-law/

Important Disclosures

This guide is for educational and informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any security, nor does it constitute investment, legal, accounting, or tax advice. Any offering of securities is made only through definitive offering documents, which should be read carefully before investing.

Past performance is not indicative of future results. Investments in private market securities involve risk, including the possible loss of principal. Private credit investments are speculative and illiquid, and carry a high degree of risk, including limited or no liquidity for extended periods, borrower default and credit loss, reliance on the manager's underwriting and workout capabilities, valuation uncertainty in the absence of continuous market pricing, leverage at the fund level, interest rate and spread risk affecting income, and the risk that distributions may be reduced, suspended, or characterized as a return of capital. Diversification does not ensure a profit or protect against loss.

Distribution rates are not yields or total return. A distribution rate reflects amounts paid to shareholders and may include return of capital, which reduces an investor's cost basis and does not represent income earned by the fund. Any gross performance information presented is accompanied by net performance calculated over the same period using the same methodology, consistent with SEC Rule 206(4)-1.

Any performance figures, market statistics, or third-party data referenced in this guide are drawn from sources believed to be reliable; accuracy and completeness are not guaranteed. Default, non-accrual, and recovery rates referenced in this guide are measured differently by different providers across borrower populations and are not directly comparable. Statements regarding projected market growth or future default rates are estimates and projections, not guarantees, and actual results may differ materially.

Charts and figures in this guide, including the capital structure diagram and the yield composition diagram, are illustrative and are intended to explain structural concepts. They do not represent the actual or projected performance, composition or pricing of any fund, account or strategy.

References to specific fund structures, including the LAGO Evergreen Credit BDC and the BIP Ventures Equity Evergreen BDC, are illustrative and educational. They are two distinct funds with different strategies and risk profiles and should not be understood as a combined strategy or as offering any benefit from being held together. Liquidity programs described for either fund are intentions, subject to board approval and available liquidity, and may be limited, prorated, modified or suspended. They are not guaranteed.

Notice of Conflict: Mr. Mark Buffington, Mr. Bill Harris, and BIP Capital, LLC are minority equity owners in LAGO Asset Management, LLC and accordingly are entitled to profits interests in LAGO. BIP Capital is also the fund administrator and receives compensation from LAGO Asset Management. Accordingly, this relationship creates a conflict of interest for BIP Capital, BIP Wealth, BIP Alliance and its personnel due to the minority ownership in LAGO. BIP Capital may be more inclined to speak favorably of, and recommend to prospective investors, LAGO Evergreen Credit given its profits interest in LAGO Asset Management.

Eligibility standards referenced in this guide, including accredited investor, qualified client and qualified purchaser definitions, are summaries of SEC rules and thresholds in effect as of the date of drafting and are subject to change. Advisors should verify current thresholds at the time of any investment.

This document has been prepared in alignment with SEC Rule 206(4)-1 (the Marketing Rule) and the Investment Advisers Act of 1940.

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