Middle Market Private Lending: A Borrower's Guide
Middle market private lending is credit provided by private funds and non-bank lenders to mid-sized companies, rather than by banks or public bond markets. It usually covers loans for acquisitions, refinancing, growth or working capital, and it is sized to companies that are too large for small-business lenders but too small for the public debt markets.
Thrive Funding arranges this kind of credit for middle-market companies. Thrive is not a lender: the lending group makes every credit decision.
What counts as the middle market
The middle market has no single legal definition. Industry sources usually describe it by company size. According to Golub Capital's white paper, a typical core middle market firm is fairly mature, on average 31 years old, has between 50 and 500 employees, and has somewhere between $10 and $100 million in annual EBITDA. The same source estimates the category includes approximately 200,000 companies across the U.S.
Size matters for lending. Lord Abbett notes that smaller companies, generally those with less than $100 million in annual earnings, have historically sourced capital from banks. Many of them now look to private lenders as well.
Why private lenders matter to this market
Private credit has grown fast. According to the Federal Reserve, the asset class totaled $1.34 trillion in the U.S. and nearly $2 trillion globally by 2024-Q2, and it has grown roughly five times since 2009.
Direct lending is the largest part of that market. Golub Capital describes direct lending, at more than $950 billion in assets across private drawdown funds and BDCs, as the largest component of private credit.
Common loan types
The terms below are the ones Thrive lists on its site. Lenders set the actual structure, pricing and covenants for each deal.
| Loan type | What it is used for | Typical role for the borrower |
|---|---|---|
| Senior debt | Ranks first in repayment from the company's assets and cash flow | Core borrowing, usually the lowest-risk layer for the lender |
| ABL (asset-based lending) | Borrowing sized against receivables, inventory or equipment | Working capital tied to specific assets |
| Mezzanine | Subordinated debt that sits below senior debt | Extra capital when senior debt is not enough |
| Acquisition financing | Funds the purchase of another business | Buying a company or a stake in one |
How a deal moves through Thrive
- Apply. The borrower submits an application at thrivefunding.com/apply. It comes in as a lead.
- Match. Thrive compares the deal against each lending group's criteria: deal size, revenue and EBITDA minimums, industries, states, loan types and pricing.
- Screen. Matching groups receive an anonymous deal summary and reply YES or NO on whether it fits.
- Introduce. Once the borrower agrees, up to three groups that said YES are introduced, best fit first. Each introduction is a separate email thread, so lenders do not see each other.
- Compare. Lenders issue term sheets on their own letterhead. Thrive sends the borrower a side-by-side summary, and the borrower chooses one.
Thrive's estimates are called indicative terms. They are not a term sheet and not an offer. Every borrower email states that Thrive is paid by its lending partners. The success fee is owed by the lending partner when the loan closes.
Deal size and who should apply
Thrive's site leads with $5 million and up, but the application accepts requests from $1 million. Requests under $1 million receive an automatic decline. Each application goes only to lending groups whose size criteria fit it, so a larger request will not be sent to a fund that lends in smaller amounts.
What to have ready
Since lenders screen on a short list of criteria, have these numbers and facts available before you apply:
- The amount you need and what it is for (acquisition, refinancing, growth or working capital)
- Annual revenue and EBITDA
- Industry and the states where you operate
- The loan type you are considering
These are the same fields used to match a deal to a lender.
FAQ
What is middle market lending?
Middle market lending is lending to mid-sized companies. When the lender is a private fund rather than a bank, it is usually called private credit or direct lending. The size range is commonly set by EBITDA, as described above.
What is a middle market loan?
A middle market loan is a loan to a company in that size range. It is often arranged by a private lender and may be senior, asset-based, mezzanine or acquisition debt. Terms depend on the lender and the deal.
What is middle market direct lending?
Direct lending means the loan is made directly by the fund or lender, without a bank syndicate or public bond issue in between. It is the largest part of private credit, according to Golub Capital.
Does Thrive lend the money itself?
No. Thrive Funding arranges private credit and matches borrowers with lending groups. The lender makes the credit decision and issues any term sheet.