What Is Middle Market Lending? Definition and Deal Sizes
Middle market lending is debt for mid-sized companies, often with $10M to $100M EBITDA. Learn who lends, typical loan types, deal sizes, and how to apply.
Middle market lending is private debt provided to mid-sized companies that are too large for small business loans but too small for the large syndicated bank loan market. Lenders are usually non-bank private credit funds, and the loans fund acquisitions, refinancing, growth, or ownership changes. Size is the main test: the companies are typically measured by annual revenue or EBITDA, not by the loan alone.
How middle market is defined
There is no single legal cutoff. Lenders use a mix of revenue, EBITDA, and deal size. According to Golub Capital's white paper, a typical "core" middle market firm is fairly mature, on average 31 years old, with somewhere between 50 and 500 employees and between $10 and $100 million in annual EBITDA. The same source estimates the category includes approximately 200,000 companies across the U.S.
Other measures put the band in a different place. Abacus Finance describes the lower middle market as companies with roughly $10 million to $150 million in annual revenue. The Federal Reserve's research on mid-sized firms uses a revenue band of $10 million to $250 million, and its data show $549 billion in credit facilities extended to those firms in the fourth quarter of 2018 (Federal Reserve).
When a source defines the market by deal size, the line is different again. Golub's visual guide defines a middle market transaction as one with a value of $500 million or less (Golub Capital series).
| Measure | Typical band | Source |
|---|---|---|
| Core middle market EBITDA | $10M to $100M | Golub Capital |
| Lower middle market revenue | $10M to $150M | Abacus Finance |
| Mid-sized firm revenue (Fed data) | $10M to $250M | Federal Reserve |
| Transaction value | $500M or less | Golub Capital series |
The bands overlap but do not match. A company can be middle market to one lender and too small or too large for another. That is why lending criteria focus on the company's numbers and the deal's size, not on a label.
Who provides middle market loans
Most middle market loans come from private lenders rather than from banks. Direct lending is the largest part of private credit. Golub's white paper puts direct lending at more than $950 billion in assets across private drawdown funds and BDCs, and it describes direct lending as nearly synonymous with the private credit category itself.
Private credit has also grown quickly. Abacus Finance reports that private credit has grown roughly five times since 2009, reaching $1.34 trillion by mid-2024.
Common loan types
Middle market lending covers several structures. The main ones are:
- Senior debt: first-lien loans repaid before other debt if the company fails.
- Asset-based lending (ABL): loans sized against receivables, inventory, or equipment.
- Mezzanine debt: subordinated debt, usually more expensive, that sits between senior debt and equity.
- Acquisition financing: loans used to buy a company, often sponsored by a private equity firm.
- Recapitalization and growth capital: debt that supports a change in ownership or expansion without selling equity.
Abacus Finance describes the core purpose of this kind of debt as funding acquisitions, recapitalizations, and growth without requiring equity dilution.
What a middle market borrower usually needs
Lenders screen on size first, then on the business. Common checks include revenue and EBITDA minimums, industry, state of operation, loan type, and the purpose of the funds. A borrower with a clear use of funds and audited or well-documented financials moves faster through review. Requests that are too small for any lender in a given network will not reach a lender.
How to apply for middle market financing
A borrower usually works through an intermediary or directly with a lender. Thrive Funding arranges private credit for middle market companies and is not a lender. Borrowers submit one application at thrivefunding.com/apply. Thrive matches the application against the criteria of its lending partners, including deal size, revenue and EBITDA minimums, industry, state, loan type, and pricing. Matching groups review an anonymous summary, and the borrower decides whether to proceed. Lenders issue term sheets on their own letterhead, and the borrower chooses among them. Thrive is paid by its lending partners, and its requests start at $1M, with most of its listed focus at $5M and above.
If a request is under $1M, it will not reach a lender and will receive a decline. Estimates Thrive provides are called indicative terms. They are not a term sheet or an offer.
Middle market lending versus other lending
Banks and private lenders both lend to mid-sized companies, but they operate differently. Private lenders often take on deals that fit a specific structure or size, and they tend to move faster and offer more flexible terms. Banks may offer lower rates on some loans but apply stricter criteria. Neither option is right for every company. The better choice depends on the company's size, the purpose of the loan, and how quickly the funds are needed.
Sources
Frequently asked questions
What does middle market lending mean?
Middle market lending is debt provided to mid-sized companies, usually by private credit funds rather than banks. It funds acquisitions, refinancing, growth, and ownership changes. Lenders decide based on the company's revenue or EBITDA and the size of the loan.
What qualifies as the middle market?
There is no single rule. Golub's research describes a core middle market firm with $10 million to $100 million in EBITDA. Abacus Finance uses $10 million to $150 million in revenue for the lower middle market. Lenders set their own limits, so a company may qualify with one lender and not another.
What is a middle market loan?
A middle market loan is a loan made to a mid-sized company, usually secured and structured for a specific purpose. Common forms include senior debt, asset-based loans, mezzanine debt, and acquisition loans.
What is middle market financing?
Middle market financing is the set of debt options available to mid-sized companies. Companies can work with private lenders directly or through an intermediary like Thrive Funding, which matches applications with lending partners whose criteria fit.
Chris Irving
Co-Founder @ Thrive
Arranges middle market financing with private credit funds, asset-based lenders and other lending partners.
