Private credit, explained.
Many creditworthy businesses pay double-digit interest to borrow. For fifteen years, institutions have been lending to them directly and collecting that interest. This page explains private credit: what it is, why it pays more, the honest risks, and where Kasu fits. No jargon, nothing hidden.
- Global market
- A$5.4 trillion
- In Australia
- A$234.5 billion
- Growth
- 13x in 15 years
- Born
- After the GFC, 2008
Lending to businesses, without the bank in the middle.
Private credit is a formal name for a simple thing: loans to businesses from lenders that are not banks. Businesses borrow and pay interest. The people who supplied the capital collect it.
Business lending has always paid well. What changed is who is allowed to do the lending, and who collects the interest.
Three things make these loans different from what you may know:
Negotiated directly
Each loan is agreed between the lender and the business, one to one. It is a relationship, not a product picked off a shelf.
Built around the borrower
The loan is structured around the business's actual cash flows and the security it can offer, not a standard template.
Held, not traded
The lender keeps the loan until it is repaid. Nobody is flipping it on a market. That patience is part of why it pays more.
Businesses always need to borrow. In 2008, banks stopped answering the phone.
Private credit was not invented in a boardroom. It grew out of a gap that opened after the Global Financial Crisis, and it has been filling that gap ever since.
- 2008
The crisis changes everything
The GFC shakes confidence in banks worldwide. Lending tightens overnight, and good businesses find the door suddenly closed.
- 2009-2012
New rules make banks retreat
Regulators respond with strict new capital rules for banks. Lending to ordinary mid-sized businesses becomes expensive for banks to do, so they pull back to home mortgages and the biggest corporates.
- 2013–2020
Specialist lenders fill the gap
Firms whose entire business is assessing and funding business loans step in. Pension funds and institutions supply the capital, and collect the interest banks used to keep.
- Today
A mainstream asset class
What began as a workaround is now one of the largest lending markets in the world, and the big banks now partner with private credit funds rather than compete with them.
The businesses never stopped being good borrowers. Accounting firms, professional practices, established companies with real revenue: they still needed working capital, and they were still repaying their loans. What changed was who was allowed to profit from lending to them.
For fifteen years the answer has been institutions: pension funds, insurers, family offices, specialist funds. Ordinary savers were left on the other side of the counter.
The gap was never about risk. It was about access.
The part worth pausing on
From a niche workaround to A$5.4 trillion.
This is not a corner of finance you have simply never heard of because it is small. It has grown thirteen-fold in fifteen years, and Australia is one of the fastest-growing private credit markets in the world.
- The global market today, up from A$0.4 trillion in 2010
- A$5.4T
- The Australian market, up from A$34.8 billion a decade ago
- A$234.5B
- Annual growth of Australian private credit over the past 10 years, roughly 4x the pace of bank lending to business
- 21%
- Of institutional investors plan to keep or increase their allocation.
- 81%
The global market's growth EY Parthenon (2026); corroborated by McKinsey and Preqin.
The global market's growth Year The global market's growth 2010 0.4 2020 1.9 2025 5.4 2029 (f'cast) 7.8 Average yearly growth, 2015–2025 EY Parthenon (2026); RBA Bulletin on non-bank lending.
Average yearly growth, 2015–2025 Segment Average yearly growth, 2015–2025 Private credit 21.0% Bank business lending 5.5% Corporate bonds 4.8%
Your super is probably already in it.
Australian super funds are among the largest holders of private credit in the country. If you have super, a slice of your retirement is probably already earning these returns. The institutions never thought it was too risky for your money; they just collected the difference.
Not all private credit is the same. Here are the seven kinds.
"Private credit" covers everything from conservative, security-backed lending to genuinely speculative rescue finance. Knowing which kind you are looking at is most of the work of judging it.
Asset-based finance
Kasu operates here, through its Credit Originators
Lending secured against specific, identifiable assets and cash flows: invoices owed to a business, receivables, equipment. Repayment comes from money already in motion, and if something goes wrong there is a real asset or contractual claim standing behind the loan. The most conservative segment by the nature of its security.
Cash flow lending (direct lending)
Kasu operates here, through its Credit Originators
Loans to established companies, repaid from the business's trading cash flow and protected by guarantees, covenants and monitoring rather than a specific asset. The market's biggest and most familiar segment, from small-business instalment lending to the senior loans institutional credit funds make to mid-sized companies.
Real estate investment lending
Mortgages over established, income-producing property. What repays the loan is rent from standing buildings, with the property as security. One of the most conservative corners of private credit.
Construction & development finance
Lending to property developers and construction projects. What repays the loan is a project completing and then selling into a future market, which is why this is a different risk universe from lending against standing buildings. The segment at the centre of the Bathla collapse, below.
Mezzanine
Dedicated funds that lend behind other lenders in the repayment queue, in exchange for a higher rate. More interest for a worse place in line. (A different thing from a Mezzanine ranking on Kasu; see the note below.)
Special situations
Flexible capital for expansions, restructures, acquisitions and one-off events in otherwise sound businesses. Opportunistic by design, priced for complexity.
Distressed debt
Lending to companies already in financial trouble, betting on the turnaround or on value in the wreckage. The speculative end of the market.
One word doing two jobs, worth being precise about: "mezzanine" names both a market segment (the dedicated junior-lending funds above) and a position in a repayment queue. On Kasu, Mezzanine and Junior are Priority Rankings you choose within an asset-based strategy: the same secured, asset-based lending, with rankings deciding who bears a loss first, and higher rates for standing further back. Standing behind the Senior ranking inside a secured structure is not the same as lending in the mezzanine segment; the segment describes what the money funds, the ranking describes where you stand in the queue.
There are niche corners beyond these, venture debt and infrastructure lending among them. Kasu operates in the first two categories only, and its lenders benefit from the security its Credit Originators take; each strategy lists its own before you commit.
Let's talk about Bathla.
In August 2026, Bathla Group, one of Sydney's largest residential developers, collapsed into administration with reported liabilities of around $3.2 billion, much of it owed to private credit funds, and a pipeline of some 15,000 homes left in limbo. It was the worst week the words "private credit" have had in Australia, and you deserve better than a lending platform that pretends it didn't happen.
What failed at Bathla was a specific kind of lending: concentrated, long-duration finance for property development, where repayment depends on projects finishing, and then selling into a future market. When construction stalls, everything behind it stalls too, and the security is a half-built building nobody can sell. On the table above, that is the speculative end of the spectrum wearing the same label as the conservative end.
None of Kasu's Lending Strategies fund property development or construction. The lending here is short-duration business credit: invoices already issued, tax obligations already assessed, payments already in motion. Repayment comes from cash flows that exist today, not from a project that has to finish and sell tomorrow. Each strategy carries its own security and recourse, covenants checked continuously, and institutional lenders standing in the same structures.
Be clear-eyed about what that means and what it doesn't: structure reduces risk, nothing eliminates it, and capital on Kasu is at risk too. It is also why this site still says "private credit" rather than retreating to a softer name. The fix for a stained label is transparency, not rebranding.
The lesson of Bathla is not "avoid private credit". It is: know exactly what your money is funding before you commit. A lender that shows you is different from one that won't, and the difference is visible before you hand over a dollar.
The higher interest is earned, not conjured. Here is where it comes from.
Over the past 25 years, private lending has delivered more return for each unit of risk than any other major form of fixed-income investing: more than government bonds, corporate bonds, or high-interest bank products. That is not magic, and it is not a free lunch. It comes from five real, explainable sources:
- You are paid for patience. These loans cannot be sold on a whim like shares. Lenders commit their capital for the term of the loan, and borrowers pay extra for that certainty. The premium for locking money up is the single biggest source of the higher return.
- The interest rate is the business rate. Businesses pay double-digit rates to borrow, to banks and non-banks alike. In private credit, the person who supplied the capital earns that rate.
- Security comes first. Well-structured private loans are secured: real claims over assets, invoices, or guarantees. If a borrower fails, secured lenders recover far more than holders of ordinary bonds typically do.
- Rules with teeth. Private loan agreements carry strict conditions the borrower must keep meeting, checked continuously. They work like smoke alarms: problems get noticed and dealt with early, not discovered after the fire.
- The lender can act. When something drifts, a private lender can step in, renegotiate, and protect capital immediately. A bondholder can only watch the price fall.
Whenever someone shows you a return above what your bank offers, ask one question: where does it come from? For private credit, the answer fits in a sentence: businesses paying business rates to borrow, with the bank's cut going to the people who actually supplied the money.
Performance comparisons: EY Parthenon (2026), corroborated by the Cliffwater Direct Lending Index and BofA Global Research, 2000–2025. Past performance does not guarantee future results. Capital invested in private credit is at risk.
Eight things to remember about private credit.
- 1
Private credit is lending to businesses without the bank in the middle. The people who supply the capital collect the interest.
- 2
It was born after the 2008 crisis, when new rules pushed banks out of ordinary business lending and specialists filled the gap.
- 3
It is now a A$5.4 trillion global market, and Australia is one of the fastest-growing corners of it, at 21% a year for a decade.
- 4
Institutions, 401K, and super funds have been earning these returns for fifteen years. The barrier for everyone else was access, not risk.
- 5
It spans a spectrum, from conservative asset-backed lending to speculative rescue finance. Judge the segment, not the label.
- 6
The higher return is earned: payment for patience, real security, and the business borrowing rate flowing to the people who supplied the money.
- 7
The risks are real: borrowers can fail, capital is committed for the term, and there is no government guarantee behind any of it.
- 8
Kasu operates at the conservative end: short-term business lending through specialist Credit Originators, each strategy carrying its own security and protections, with every movement of funds permanently recorded.
Where these numbers come from.
Nothing on this page asks to be taken on faith. Figures are drawn from EY Parthenon's Annual Australian Private Debt Market Overview (March 2026) and cross-checked against the independent sources below. Where estimates differ, we cite the conservative end of the range.
- EY Parthenon
- Annual Australian Private Debt Market Overview, March 2026. Primary source.
- Preqin
- Global Private Debt Report and Investor Outlook. Corroborates manager counts and investor intentions.
- ASIC
- Australia's Evolving Capital Markets discussion paper (Feb 2025). Australian sizing and regulatory direction.
- Cliffwater Direct Lending Index
- Long-run data on direct lending returns and recoveries.
- ABC News
- Reporting on the Bathla Group administration, August 2026. Liabilities and pipeline figures as reported by administrators.
- McKinsey & Company
- Global Private Markets Review. Corroborates global market size and growth.
- International Monetary Fund
- Global Financial Stability Report (April 2024), chapter on private credit.
- Reserve Bank of Australia
- Bulletin on the Australian non-bank lending sector.
- Bank for International Settlements
- Quarterly Review, non-bank finance trends.
All AUD figures use prevailing exchange rates at each reporting period. Forecasts are EY Parthenon's base case. Past performance is not indicative of future returns.
Ready to see where your money could work?
Now that you know what private credit is, see the live lending strategies on the platform, how each one is structured, and what stands between your capital and a loss.