Private credit now accounts for roughly 58 percent of mid-market commercial real estate loans in the $10M to $50M range, according to CBRE Research. That number was nowhere close a few years ago. It moved because the credit environment changed and private credit adapted faster than traditional banks did.
Private credit is no longer the alternative. It is the primary market.
If your origination desk still treats regional banks as the default first call on every deal, your conversion rate is paying the price. Bank credit boxes have narrowed to the point where anything with complexity, a transitional story, or near-term rollover risk is getting declined or quietly ignored. Every mismatch between where a deal belongs and where it gets sent first costs the sponsor time they usually do not have.
Why Bank Credit Boxes Now Cover a Fraction of Mid-Market Deal Flow
Banks are not retreating from commercial real estate entirely. They are retreating from complexity. Regulatory pressure following bank failures in 2023 put commercial real estate concentration limits under scrutiny. Most regional lenders are now actively managing down their exposure, not adding to it. Internal risk appetite has pushed traditional depositories toward ultra-clean, stabilized, low-leverage deals. Everything else is getting redirected, declined at the committee level, or quoted with conditions that make the execution unusable.
The threshold for what counts as a clean, bankable deal has moved substantially. Deals that cleared bank committees three years ago are no longer clearing them today.
Private credit stepped into that gap and built a product around it: speed, structural flexibility, and the willingness to underwrite a business plan rather than trailing 12-month historicals.
The cost of misrouting is concrete. A sponsor who submits a transitional deal to a regional bank, waits four weeks for a committee decision, and gets declined has lost a month of runway on a deal where time was already the constraint. Pivoting to private credit at that point means starting the clock over. The deal has not changed. The only thing that changed is that the sponsor is now negotiating with less time and less leverage.
Misrouting does not just slow down one deal. It changes the negotiating position on the next attempt.
The 4 Deal Triggers That Route Directly to Private Credit
The teams routing correctly are not guessing. They are running a short set of questions at intake that tell them immediately whether a deal belongs in the bank lane or the private credit lane. Any single trigger is enough. Most mid-market deals trip at least one.
If the asset cannot support a 1.25x DSCR at a stressed rate, it goes to private credit. Banks are not pricing that risk in the current environment. They are declining it.
If the deal requires stretch senior execution above 70 percent LTV, or needs a mezzanine layer integrated into the capital stack, it goes to private credit. The structural complexity alone disqualifies most bank programs.
If the sponsor has a hard deadline within 45 days, whether a rate cap expiring, a maturity coming due, or an acquisition with earnest money at risk, it goes to private credit. Bank committees do not move in 45 days on complex deals.
If the asset has heavy tenant improvement budget, lease rollover inside the loan window, or trailing financials that do not reflect the forward business plan, it goes to private credit. Banks underwrite what has already happened. Private credit underwrites what is going to happen.
None of these are edge cases. In the current market, they describe the majority of mid-market deal flow.
Why Private Credit’s Higher Rate Is Not the Whole Story
Private credit is more expensive than bank debt. That conversation needs to happen at intake, not after the term sheet arrives.
A bank quote at a lower coupon looks cheaper on one line of the term sheet. But it also comes with 60 days of committee risk, a real chance of a last-minute retrade on proceeds, and covenants that may not work for the business plan. The total cost of that process is not on the rate sheet.
A deal submitted to a regional bank that gets declined four weeks in and then pivoted to private credit does not just lose 30 days. It arrives at the private credit lender with a sponsor who is now visibly under pressure. The negotiation is different. The terms reflect it.
Sponsors who understand that private credit is buying certainty, not just capital, make faster decisions and close cleaner deals.
The Practical Move
Run the four routing triggers at intake on every mid-market deal before the first call goes out. DSCR at stressed rates. LTV and capital stack complexity. Hard deadline proximity. Trailing vs. forward fundamentals.
If the deal trips any one of them, route to private credit first. Do not submit to a regional bank as a test. The four weeks you lose on a predictable decline are four weeks of runway the sponsor needed.
The 58 percent figure reflects where the capital actually is for deals that carry any complexity. The teams closing consistently are not finding better deals. They are routing faster and more accurately.
LoanBase helps you identify which private credit lenders are actively deploying in your specific asset class and loan profile, so routing decisions are based on live market data rather than default habits.
