Direct Lending Fund
Private Credit glossary · Fund Structures, Returns & Economics
Definition
Closed-end or semi-liquid fund whose primary strategy is originating senior secured loans to middle-market borrowers.
Direct Lending Fund in plain English
A direct lending fund is a big pool of money that lends directly to medium-sized companies, cutting out the bank that would normally sit in the middle. "Senior secured" means if the company goes bust, these lenders get paid back first and they hold something valuable (like equipment or the business itself) as collateral, so they're near the front of the line. Think of it as a group of investors becoming the bank: they hand a company a loan, collect interest for years, and get their money back at the end. "Middle-market" just means the borrowers are real, established companies — too big for a personal loan, too small to easily borrow from Wall Street. "Closed-end" means your cash is locked in for the fund's life; "semi-liquid" means you can pull some out on a schedule.
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