Middle Market
Private Credit glossary · Loan Structures & Instruments
Definition
US middle-market companies in lending are typically defined by annual EBITDA between $5M and $250M, the core target borrower base for direct lenders. The standard sub-segmentation is Lower Middle Market ($5M–$25M EBITDA), Core Middle Market ($25M–$75M EBITDA), and Upper Middle Market ($75M–$250M EBITDA); borrowers with EBITDA above $250M generally migrate to the broadly syndicated loan (BSL) market. Lower-middle deals command 150–200 bps of incremental yield over upper-middle equivalents (the size premium).
Middle Market in plain English
"Middle market" is just a size label for companies that are bigger than a corner shop but smaller than a household-name corporation — measured here by EBITDA, a rough proxy for yearly profit (earnings before interest, taxes, and some accounting deductions). Lenders slice this group into lower ($5M–$25M of EBITDA), core ($25M–$75M), and upper ($75M–$250M); once a company earns more than $250M it's big enough to borrow in the giant public loan market instead. Why care? These mid-sized firms are the main customers for "direct lenders" (funds that lend privately instead of through banks). And the smaller the company, the higher the interest rate lenders can charge — roughly 1.5 to 2 percent extra — because small borrowers are seen as riskier and have fewer places to shop for money (the "size premium").
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