Most conversations about private markets in the advisory channel begin with ownership. Private equity, venture capital, and growth equity: buying a share of a company and waiting for it to be worth more. That is the growth side of private markets, and BIP Capital's companion volume, The Complete Guide to Private Equity for RIAs, covers it in depth. Read The Complete Guide to Private Equity for RIAs.
This guide covers the other half. Private credit is not ownership. It is lending: a fund loans to a private company, collects interest, and receives the principal at maturity. The return is contractual rather than residual. The upside is capped at the coupon. And the entire discipline of the asset class boils down to a single question, asked repeatedly across hundreds of borrowers: will this loan be repaid?
That difference matters more than the shared "private markets" label suggests. Private equity rewards picking winners. Private credit rewards avoiding losers. The two sleeves belong in different parts of a client portfolio, are evaluated with different metrics, carry different tax treatment, and fail in different ways.
From bank loan to private loan
For most of the twentieth century, a mid-sized American company that needed to borrow went to a bank. After 2008, that changed. Capital rules and leveraged lending guidance made middle-market lending less attractive on bank balance sheets, and specialist funds stepped into the space banks vacated. Borrowers often preferred the new lenders: a single counterparty, faster execution, greater certainty of close, and no public disclosure of their terms.
The scale of what followed is easy to understate. The Federal Reserve Bank of Boston documents US private credit growing in real terms from roughly $46 billion in 2000 to about $1 trillion in 2023.1 Federal Reserve research now estimates US private credit at approximately $1.4 trillion as of the end of 2025, roughly the same size as the broadly syndicated loan market.2 A financing channel that barely registered a generation ago now rivals the public loan market.
Why this guide, and why now
Private credit reached advisory portfolios at an awkward moment. The asset class scaled up amid an unusually benign credit environment and is now facing its first real test since reaching that scale. Default readings in 2026 have hit record levels across several measures. Non-traded Business Development Companies (BDCs) have seen redemption requests far exceed their quarterly caps, forcing proration. Rating agencies and regulators have all published cautionary work within the past year.
None of that makes private credit uninvestable. It does make private credit a place where the quality of an advisor's judgment shows up quickly. This guide is designed to support that judgment rather than to sell an outcome. It presents the stress data openly, explains what each measure captures and what it does not, and gives advisors a framework for evaluating segment, structure, and manager.
How to use this guide
The two guides are designed as a matched set, and their chapters correspond. Where a topic is covered fully in the equity volume, this guide covers the credit-specific angle and points back rather than repeating the material. This applies to investor eligibility tiers (Chapter 5), the general fiduciary framework (Chapter 7), and the portfolio liquidity budget (Chapter 6).