Middle Market Lending Companies: How Lenders Work

Middle market lending companies are non-bank lenders and private credit funds that make loans to mid-sized businesses. Most of these loans are senior, secured, or subordinated debt used for growth, acquisitions, refinancing, or working capital. This guide explains who these lenders are, how their loan types differ, and how a borrower can reach the right group.

What is middle market lending?

Middle market lending is private debt provided to companies too large for small-business loans but too small for the public bond and syndicated loan markets. The lender is usually a fund or specialty firm rather than a bank. According to Golub Capital, direct lending now has more than $950 billion in assets across private drawdown funds and BDCs, and it is the largest part of private credit.

The loans are negotiated directly between the borrower and a small group of lenders. Terms, covenants, and pricing are set in that negotiation rather than in a public market.

Which companies count as middle market?

There is no single legal definition. Lenders use revenue, EBITDA, or deal size as a rule of thumb. Golub Capital describes a typical core middle market firm as fairly mature, typically with 50 to 500 employees and between $10 and $100 million in annual EBITDA. The same source estimates that the category includes about 200,000 companies across the U.S.

The Federal Reserve uses a revenue band of $10 million to $250 million when it studies mid-sized borrowers. Each lender sets its own cutoff, so a company near the edge of a band should check each lender's criteria.

Why has middle market lending grown?

Banks have supplied a smaller share of business debt over the past three decades. Bank Policy Institute reports that the bank share of business debt fell from about 30 percent in the early 1990s to 20 percent in 2021. The same source notes that nonbank participation in syndicated loans rose from about 20 percent in 1993 to 70 percent in 2014.

That shift created room for private lenders. Borrowers now have more sources of capital, and lenders have more deals to choose from.

What types of middle market loans exist?

Most middle market financing falls into a few families. The table below compares the common types.

Loan type	Typical use	Security	Position in the capital stack
Senior secured debt	Growth, refinancing, acquisitions	Assets or enterprise value	First claim on repayment
Asset-based lending (ABL)	Working capital tied to receivables and inventory	Receivables, inventory, equipment	Usually first claim on those assets
Mezzanine debt	Filling a gap between senior debt and equity	Often unsecured or junior	Subordinated to senior debt
Acquisition financing	Buying another company	Target assets and cash flow	Varies with the structure

Senior debt usually carries the lowest risk and price. Mezzanine debt costs more because the lender is paid after senior lenders. ABL is sized against the value of specific current assets, which is why it is common for companies with large receivables or inventory.

How do middle market lenders differ from banks?

Banks and private lenders serve overlapping borrowers, but they work differently. Private lenders often move faster, accept more complex structures, and hold loans on their own balance sheets rather than selling them on. Banks are usually bound by stricter regulatory capital rules.

The Federal Reserve found that in the fourth quarter of 2018, its data showed $549 billion in credit facilities extended to mid-sized firms, with middle market credit utilization at $355 billion, or about two-thirds of the aggregate credit line. Those figures show how much of this lending runs through bank credit lines, which is one reason private lenders compete for a share of it.

Who are the largest middle market lending firms?

The firms that appear most often in industry rankings are large private credit managers. Their scale and focus vary:

• Golub Capital is a direct lender with a long record in middle market lending.
• GrowthCap's 2025 ranking lists firms such as Twin Brook, the middle market direct lending arm of TPG, and GoldenTree, a credit manager founded in 2000.
• Tree Line Capital Partners focuses on direct lending to the lower middle market.
• Prospect Street provides senior secured loans, mezzanine, and equity to U.S. middle market companies.
• Saratoga Partners describes itself as a resource for middle market capital needs.
• KKR and Nuveen run middle market lending strategies for institutional and private investors.

Large firms are not always the right fit. A company with $10 million in EBITDA may be outside the target range of a fund built for upper middle market deals. Fit depends on size, sector, state, loan type, and pricing.

How do you find the right middle market lender?

A borrower can approach lenders one at a time, which takes weeks, or send one application to a network that matches it against lender criteria. Thrive Funding works the second way. Thrive Funding is not a lender. It arranges private credit for middle market companies, and the lender makes every credit decision.

The process works like this:

1. The borrower submits one application at thrivefunding.com/apply.
2. Thrive compares the deal with each lending group's criteria, including deal size, revenue and EBITDA minimums, industries, states, loan types, and pricing.
3. Groups whose criteria match receive an anonymous deal summary and reply yes or no.
4. After the borrower agrees, up to three groups that said yes receive introductions, best fit first. Each introduction is a separate email thread.
5. Lenders issue term sheets on their own letterhead. Thrive sends the borrower a side-by-side summary, and the borrower chooses one.

Thrive is paid by its lending partners, and every borrower email says so. Requests under $1 million receive an automatic decline. Estimates from lenders are called indicative terms. They are not term sheets and not offers.

What should a borrower prepare?

Lenders screen on a small set of facts before they read further. Have these ready: the amount needed, the purpose of the loan, recent revenue and EBITDA, the industry and states of operation, and the loan type being considered. Clear answers on those points let a matching process work faster.

Sources

• Direct middle market lending | Nuveen
• The Top Private Credit Firms of 2025 | GrowthCap
• An Income Alternative: Exploring Middle Market Direct Lending | Golub Capital
• Middle-Market & Lower Middle-Market Lending | Prospect Street
• Upper Middle Market Lending | KKR
• Tree Line Capital Partners
• Home | Saratoga Partners
• Are There Competitive Concerns in Middle Market Lending? | Federal Reserve
• Assessing the Decline in Bank Lending to Businesses | Bank Policy Institute