“Banks were once places to hold money and were very careful in lending to finance families as they built a future.” — Elizabeth Warren
Well-versed in banking practices and economics, Warren called for tougher banking regulation before the Great Recession of 2008–2009. In her famous toaster analogy, she noted that the government wouldn’t allow a consumer to buy appliances they deemed unsafe. An alternative way of saying “financial products should have similar safety measures in place to protect investors.”
While banks are tightening lending practices, making it more difficult for households and businesses to receive loans, this decision is likely intended to protect themselves from downside risk and delinquency.
But credit is a crucial economic driver, and the retreat of traditional creditors creates an opportunity for other asset managers to fill the gap. Enter private credit—also known as private debt—an alternative investment class that can further diversify your portfolio, protect against inflation, and potentially deliver enhanced returns.
According to Federal Reserve Senior Loan Officer Opinion Surveys, 51.8% of banks said they had tightened loan standards for large- and medium-sized businesses over the second quarter of 2023. The following October issue reports that 35.6% continued to tighten while 62.7% have remained relatively unchanged. Throughout 2024, three additional surveys have been released, and the vast majority have stayed put, with a few going so far as to be even more discerning when offering loans. Into 2025, both the January and April reports primarily cited modestly tighter or unchanged lending policies across commercial, industrial, and consumer lending.
The most commonly cited reasons behind years of stricter loan requirements among banks have been unfavourable economic expectations and legislative disruptions. Tariffs are likely a large portion of both, which connect to the third issue—industry-specific pressures.
When used responsibly, loans, whether for a student loan, a new car for a growing family, or a home purchase, can improve the everyday consumer’s quality of life. Whether it ‘s expanding operations and hiring skilled workers, securing more cost-efficient equipment, or acquiring other companies, businesses use credit in a similar capacity.
Whatever the case may be, loans typically serve the liquidity demands of today under the assumption that they’ll lead to a net-positive outcome to offset the interest payments they incur.
Credit is ultimately a tool and should be used appropriately—a hammer is best suited for a nail, not a screw. After the global financial crisis, central banks aggressively cut interest rates to zero or near zero; if inflation is above the nominal interest rate on the loan—known as negative real interest rates—it incentivizes borrowers to spend or invest instead of save, as money left in a savings account erodes purchasing power. In such circumstances, borrowers actually benefit. This is why central banks may implement negative rates during deflationary periods when cash hoarding negatively impacts overall aggregated demand.
After years of near-zero rates and accrued pandemic savings, policymakers were tasked with curbing pent-up demand alongside higher household savings. This led to one of the most aggressive cycles of interest rate hikes in history. Public markets, like households and businesses, struggled with these rapid changes. Recent developments regarding global trade issues have not been helpful.
Stuck between competing forces, traditional lenders took proactive measures to navigate these challenges as well. When uncertainty prevails, private credit funds can capture deals with reduced competition from banks.
As private investment opportunities are typically reserved for large institutions, they tend to be more insulated from investor sentiment and exhibit greater price stability during periods of heightened volatility. With the public removed from the equation, alternatives usually have a lower correlation to traditional investments and are used as an effective way to diversify portfolios.
Alternative investments are a broad category, and while we have exposure to several, the focus today is on private lending strategies. Jonathan Gray, president of Blackstone, has gone so far as to declare that this is a “golden moment” for the fast-growing industry in 2023. Goldman Sachs’ 2025 Family Office Investment Insights Report indicates that interest is still strong, as evidenced by the higher year-over-year allocations and a willingness to deploy capital.
But how is it positioned to excel? With the rare combination of a high-interest-rate environment bearing down on borrowers alongside traditional lenders pulling back, private lenders can take advantage of these opportunistic market conditions:
We’ve been firm believers in alternative investments for longer than the recent attention they’ve received, and with our strategies and fund managers in place, we’re not only ready to take advantage of opportunities as they arise—we already have been. Experts have said that individual investors are likely underallocated towards private credit, especially given the asset class’s record-breaking year climb in recent years and an expected global market size of $2.6 trillion by 2029.
Thankfully, we’ve been invested in this thriving asset class for long enough to know how to make the best of it for our clients. Alternatives have a host of benefits to offer investors, but like all investments, they also exhibit certain features that must be accounted for—something we’re well accustomed to.
Article updated on September 17th, 2025, to reflect the most recent data reports from the Board of Governors of the Federal Reserve System.
