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Private credit and direct lending

Seven lessons on how lenders that aren’t banks lend to companies: what private credit is and who invests in it, direct lending and how loans are priced, leverage, coverage and covenants, asset-based lending, rescue financing and workouts, the investment process from screening to the IC memo, and the fund side, from GPs and LPs to due diligence questionnaires. Each lesson ends with desk scenarios on made-up companies: work out the numbers, judge a deal sheet or a memo, and make the call.

  1. What private credit is

    Loans made by lenders that aren't banks: who they lend to, why the market grew, who puts up the money and how it differs from loans and bonds.

    6 questions

  2. Direct lending

    Senior secured, unitranche, first and second lien, sponsor and non-sponsor deals, and how a loan is priced: spread, floor, fees and call protection.

    6 questions

  3. Credit metrics and covenants

    EBITDA and its adjustments, leverage, interest and fixed-charge coverage, liquidity, and maintenance vs incurrence covenants, with a deal to decide.

    7 questions

  4. Asset-based lending

    Lending against receivables, inventory and property: the borrowing base, advance rates, what's ineligible, field exams, and who it suits.

    7 questions

  5. Special situations and rescue financing

    Lending to companies in transition or distress: downside protection, recovery, payment-in-kind interest, workouts and amend-and-extend.

    6 questions

  6. The investment process

    From sourcing and screening to due diligence, the investment committee memo, closing and watching the loan, with a memo to judge.

    6 questions

  7. The fund side

    GPs and LPs, funds, separately managed accounts and BDCs, management and incentive fees, investor reporting, and due diligence questionnaires.

    8 questions
More info

How it works

Each lesson is a short read with examples, then a few practice questions. Some ask you to type an answer (a number, an address, what a piece of code prints), some have you pick one, and some have you tap steps or lines into the right order. You can try again as often as you like; after two misses there’s a button to show the answer.

What do I need to know first?

Nothing beyond percentages and a calculator. Finance: Loans and real estate covers some of the same ideas for property; this course is about lending to companies. The few code examples are short Python that shows the arithmetic; you only need to read them.

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Where is my progress saved? In this browser, like the rest of the site. Nothing to sign up for.

“Python” is a registered trademark of the Python Software Foundation. This course isn’t made by or affiliated with it.

For learning only, not financial, legal or investment advice. The companies, deals and funds are made up, and the limits, fees and advance rates in the examples are typical figures, not any lender’s or fund’s; real ones vary by lender, borrower, market and time.