Anyone Will Fund You on a Good Day

The real test of a lending partner shows up after the deal closes, not before.

When I moved into private credit, the reaction from friends outside finance was almost always the same. They were headed into nonprofits, teaching, government work, the professions you tell your parents about at dinner. Lending money seemed like the opposite of that, a transaction dressed up as a relationship. One friend asked me directly: if your firm disappeared tomorrow, would anyone notice, or would another lender simply take the check size and fill the gap?

It is a fair question, and one worth sitting with rather than answering defensively. Private credit has grown into a roughly $1.7 trillion asset class, and capital has followed the returns. Direct lenders, BDCs, and credit funds have multiplied, and on a healthy deal with 3x leverage, tight pricing, and clean adjustments, the pool of interested lenders is deep. Anyone can fund a good deal. The differentiation shows up somewhere else entirely.

The Commodity Illusion

Capital itself is fungible. A dollar from one lender spends the same as a dollar from another, and term sheets on strong credits tend to converge fast because everyone is pricing off the same comps. That convergence creates an illusion that lending is a commodity business where relationships are decoration on top of a spreadsheet. The illusion holds right up until performance dips, a covenant gets tripped, or an add-on acquisition needs to close in three weeks instead of three months.

Distressed and stressed private credit situations have climbed steadily since rates moved higher, with payment-in-kind usage on syndicated and direct loans hitting multi-year highs as borrowers and lenders worked to preserve cash. Those numbers matter less as a market statistic and more as a signal of how many partnerships were actually tested during that stretch. Some lenders held the line on strict terms and lost the relationship along with the recovery. Others treated the moment as the actual job.

What Shows Up When Things Go Sideways

Years ago I worked with a manufacturer of induction heating equipment for hospitality venues and stadiums, the kind of business that depends entirely on people gathering in large numbers. When the world shut down in 2020, its revenue did too, almost overnight. The easy move for a lender in that position is to tighten immediately, protect the collateral, and let the workout process run its course.

Instead, we chose to PIK the interest, trading near-term cash coupon for a longer path back to health, because the management team had earned that trust before the crisis hit. The business preserved jobs through the shutdown, recovered as venues reopened, and eventually repaid the deferred interest in full once cash flow normalized. None of that outcome was guaranteed at the time the decision was made. It required believing the people running the business more than the trailing twelve months on the financial statement.

Honesty Is Not the Same as Comfort

Good partnership also means catching problems before they become emergencies, which is rarely a comfortable conversation to start. A lender who waits until covenant breach to raise a concern has already failed the relationship, even if the paperwork says otherwise. Flagging a soft quarter, a customer concentration issue, or a margin slide early gives a sponsor and management team room to act instead of react. Every operator I have worked with values that early warning more, in hindsight, than any grace period extended after the fact.

Renegotiating economics works the same way. Lenders who bend on every point to avoid friction are not actually building trust, they are avoiding the harder conversation that trust is built on. A partner willing to say no to a request, and explain why, is worth more over a ten-year relationship than one who says yes until the moment it costs them something and then disappears. Sponsors remember which lenders were straight with them when the numbers were tight, and they route their next three deals accordingly. Accommodation without candor is not generosity; it is a bill that comes due later, usually at the worst possible time.

The Answer to the Question

So would anyone notice if the firm disappeared tomorrow? Yes, and not only on the deals that go sideways. Even on the healthy ones, where a dozen lenders could match the check by Friday, borrowers choose to work with us despite our not being the lowest price, because the capital is only part of what we bring. The rest is proactive: the operating workshops, the WON network, the board members and operators we can put in a room when a portfolio company needs them. That value shows up whether or not a covenant is ever tested, and it is the reason a sponsor picks up the phone for us first rather than shopping the last ten basis points.

That is the part a commoditized view of lending misses entirely. In a $1.7 trillion market, capital is abundant and term sheets converge, so if funding were the whole job, price would decide everything and no lender would be missed. It does not, and we are, because the work starts before the wire goes out and continues long after.

And it matters most in the moments the spreadsheet cannot dictate: the quarter the numbers slip, the year a pandemic erases a customer base overnight, the three-week window when an add-on has to close or the opportunity is gone. Those choices come down to judgment, to the willingness to trust people over trailing financials, and to whether the relationship was ever real in the first place.

My friend headed into nonprofit work and I into private credit, and I no longer think the distinction he drew holds up. The best version of this job is not moving capital from one place to another. It is the value we add before anyone asks, standing behind a management team when standing behind them is the hard thing to do, and telling them the truth when the truth is unwelcome. Capital is the commodity. The partnership is not. And the difference between the two shows up long before a deal ever goes sideways, and long after it closes.