Private Credit Interview Questions

Private credit and debt practice questions — direct lending structures, unitranche, covenants, leverage and coverage metrics, intercreditor dynamics, and credit analysis judgment for the fastest-growing seat in alternatives.

Practice free — 2,245 Private Credit interview questions with full explanations →

How do I prepare for a private credit interview?

Think like a lender: downside first. Drill leverage and coverage math, covenant packages, and structure (unitranche vs senior-stretch, PIK, delayed draw). KomFi gives you 2,245 practice questions with lender-grade explanations.

What does a private credit analyst do?

Underwrite loans to sponsor-backed and middle-market companies: model the credit, negotiate terms and covenants, and monitor the book. Interviews test credit judgment plus structural fluency — both drilled here.

How is private credit different from private equity?

PE owns the equity and the upside; private credit lends against the same businesses for contractual return with downside protection. The analytical toolkit overlaps, but credit pays you to find what can go wrong.

Free sample questions

  1. If the current SOFR rate drops to 0.25%, what is the all-in interest rate the borrower must pay?
  2. A borrower's credit agreement includes a 'Negative Pledge'.… — Is this allowed?
  3. A loan is priced at SOFR + 600 bps with a 1.0% floor. If the current SOFR rate is 0.5%, what is the total inte
  4. If Term SOFR is currently 0.75% and the loan was issued with a 2.0% Original Issue Discount (OID) over a 5-yea
  5. What is the company's 'covenant headroom' in EBITDA terms?
  6. Is the company in default?
  7. A loan agreement specifies that the borrower's Total Leverag… — How should this covenant be classified?
  8. What is the immediate consequence for the CLO Equity holders?
  9. If the company subsequently raises a 'down round' at $6.00 per share, what is the fund's new conversion price?
  10. If the equity tranche is $50M (10% of capital), what is the 'Cash-on-Cash' yield before defaults?
  11. If current SOFR is 0.50%, what is the total coupon rate?
  12. What is the likely impact on the loan's fair value?
  13. If SOFR is currently 0.50%, what is the all-in interest rate paid by the borrower?
  14. If the company currently has $100M in debt, what is the minimum equity injection required to restore complianc
  15. If the expected life of the loan is 4 years and SOFR is currently 5.0%, what is the approximate all-in yield t
  16. If the net debt is $272 million, how much 'headroom' does the company have on its leverage covenant expressed
  17. If the current 3-month Term SOFR is 0.65%, what is the all-in coupon rate paid by the borrower?
  18. A 'Negative Pledge' clause in a credit agreement primarily restricts the borrower from:
  19. If the current SOFR rate is 0.50%, what is the all-in interest rate paid by the borrower?
  20. If the current market SOFR rate is 0.25%, what is the all-in interest rate?
  21. What is the minimum equity cure amount the sponsor must inject to restore compliance with the leverage covenan
  22. How much cash does the borrower actually receive at closing from this tranche?
  23. If the company issues a new incremental 'accordion' facility at a spread of 600 bps, and the original facility
  24. What is the Covenant EBITDA?
  25. If SOFR resets to 0.50% and the loan is priced at 98.00 (OID), what is the current effective coupon rate?
  26. If the borrower draws20M while SOFR is 4.5%, what is the total annual cost of the facility in dollars?
  27. In a 'Maintenance' vs 'Incurrence' covenant comparison, which of the following is true of Incurrence covenants
  28. If the current SOFR rate is 0.50% and the loan is marked at 98.0 (fair value), what is the current yield?
  29. If SOFR rises to 6.00%, what is the borrower's effective interest rate?
  30. If the unrated equity tranche is $50M, and the pool suffers a 2% annual default rate with 65% recovery, what i
s Equity holders are required to inject additional fresh capital into the vehicle.","The interest rate on all of the loans in the collateral pool is automatically increased across the board."],"section":"documentation-covenants-terms","subcategory":"collateral-security-intercreditor","courseId":"private-credit-debt","stimulus":"A \\$500 million $CLO$ (Collateralized Loan Obligation) collateral pool suffers a series of defaults that reduce the par value of the loans. As a result, the Overcollateralization ($OC$) test fails.","question_stem":"What is the immediate consequence for the $CLO$ Equity holders?","seoSlug":"what-is-the-immediate-consequence-for-the-equity-holders-vde4og"},{"_id":"6a652bb3da22226f77b11ee7","id":"PCD_179","difficulty":"easy","question":"A venture capital fund invests \\$6M in a startup. The investment includes 'full-ratchet' anti-dilution protection at a \\$9.00 conversion price.\n\nIf the company subsequently raises a 'down round' at \\$6.00 per share, what is the fund's new conversion price?","options":["\\$8.53","\\$6.00","\\$7.50","\\$9.00"],"section":"documentation-covenants-terms","courseId":"private-credit-debt","stimulus":"A venture capital fund invests \\$6M in a startup. The investment includes 'full-ratchet' anti-dilution protection at a \\$9.00 conversion price.","question_stem":"If the company subsequently raises a 'down round' at \\$6.00 per share, what is the fund's new conversion price?","seoSlug":"if-the-company-subsequently-raises-a-down-round-at-6-00-per-1xe557"},{"_id":"6a652bb3da22226f77b11eef","id":"PCD_187","difficulty":"medium","question":"A CLO equity investor is analyzing a pool of \\$500M in loans. The rated debt tranches have a weighted average cost of $SOFR + 200$ bps. The loan pool yields $SOFR + 450$ bps.\n\nIf the equity tranche is \\$50M ($10\\%$ of capital), what is the 'Cash-on-Cash' yield before defaults?","options":["15.0%","7.5%","4.5%","27.0%"],"section":"documentation-covenants-terms","subcategory":"pricing-terms-economics","courseId":"private-credit-debt","stimulus":"A CLO equity investor is analyzing a pool of \\$500M in loans. The rated debt tranches have a weighted average cost of $SOFR + 200$ bps. The loan pool yields $SOFR + 450$ bps.","question_stem":"If the equity tranche is \\$50M ($10\\%$ of capital), what is the 'Cash-on-Cash' yield before defaults?","seoSlug":"if-the-equity-tranche-is-10-of-capital-what-is-the-cash-on-c-xchlqh"},{"_id":"6a652bb3da22226f77b11eff","id":"PCD_203","difficulty":"easy","question":"An investor sees a loan priced at $SOFR + 600$ bps with a 1.00% $SOFR$ floor.\n\nIf current $SOFR$ is 0.50%, what is the total coupon rate?","options":["6.00%","7.00%","7.50%","6.50%"],"section":"documentation-covenants-terms","subcategory":"pricing-terms-economics","courseId":"private-credit-debt","stimulus":"An investor sees a loan priced at $SOFR + 600$ bps with a 1.00% $SOFR$ floor.","question_stem":"If current $SOFR$ is 0.50%, what is the total coupon rate?","seoSlug":"if-current-is-0-50-what-is-the-total-coupon-rate-1i502c"},{"_id":"6a652bb3da22226f77b11f0d","id":"PCD_217","difficulty":"easy","question":"A $BDC$ portfolio is valued under $ASC\\ 820$. A specific loan was originated at par (\\$100) with a coupon of $SOFR + 550$. Due to an $EBITDA$ decline, the borrower's internal rating is downgraded, and the market yield for similar risk is now $SOFR + 750$.\n\nWhat is the likely impact on the loan's fair value?","options":["The value will increase to \\$102 to compensate for the higher risk.","The loan will be marked at a premium because it is now 'higher yield'.","The loan will remain at par due to its floating-rate nature.","The loan will be marked at a discount to par."],"section":"documentation-covenants-terms","subcategory":"pricing-terms-economics","courseId":"private-credit-debt","stimulus":"A $BDC$ portfolio is valued under $ASC\\ 820$. A specific loan was originated at par (\\$100) with a coupon of $SOFR + 550$. Due to an $EBITDA$ decline, the borrower's internal rating is downgraded, and the market yield for similar risk is now $SOFR + 750$.","question_stem":"What is the likely impact on the loan's fair value?","seoSlug":"what-is-the-likely-impact-on-the-loan-s-fair-value-hidda1"},{"_id":"6a652bb3da22226f77b11f36","id":"PCD_258","difficulty":"easy","question":"A borrower has a \\$150M floating-rate loan at SOFR + 575 bps with a 1.0% SOFR floor.\n\nIf SOFR is currently 0.50%, what is the all-in interest rate paid by the borrower?","options":["6.25%","1.00%","7.25%","6.75%"],"section":"documentation-covenants-terms","subcategory":"pricing-terms-economics","courseId":"private-credit-debt","stimulus":"A borrower has a \\$150M floating-rate loan at SOFR + 575 bps with a 1.0% SOFR floor.","question_stem":"If SOFR is currently 0.50%, what is the all-in interest rate paid by the borrower?","seoSlug":"if-sofr-is-currently-0-50-what-is-the-all-in-interest-rate-p-1haja5"},{"_id":"6a652bb3da22226f77b11f3c","id":"PCD_264","difficulty":"medium","question":"A borrower fails a quarterly leverage test and invokes its 'equity cure' right. The leverage covenant is 4.5x and the company's EBITDA is \\$20M, meaning debt must not exceed \\$90M.\n\nIf the company currently has \\$100M in debt, what is the minimum equity injection required to restore compliance?","options":["\\$45M","\\$5M","\\$10M","\\$20M"],"section":"documentation-covenants-terms","subcategory":"financial-covenants","courseId":"private-credit-debt","stimulus":"A borrower fails a quarterly leverage test and invokes its 'equity cure' right. The leverage covenant is 4.5x and the company's EBITDA is \\$20M, meaning debt must not exceed \\$90M.","question_stem":"If the company currently has \\$100M in debt, what is the minimum equity injection required to restore compliance?","seoSlug":"if-the-company-currently-has-100m-in-debt-what-is-the-minimu-h8am33"},{"_id":"6a652bb3da22226f77b11f85","id":"PCD_337","difficulty":"medium","question":"A private debt fund originates a term loan to a middle-market healthcare company with the following terms: $SOFR + 600$ bps, a 1.00% $SOFR$ floor, and a $2\\%$ original issue discount ($OID$).\n\nIf the expected life of the loan is 4 years and $SOFR$ is currently 5.0%, what is the approximate all-in yield to the lender?","options":["11.50%","11.25%","12.00%","11.00%"],"section":"documentation-covenants-terms","subcategory":"pricing-terms-economics","courseId":"private-credit-debt","stimulus":"A private debt fund originates a term loan to a middle-market healthcare company with the following terms: $SOFR + 600$ bps, a 1.00% $SOFR$ floor, and a $2\\%$ original issue discount ($OID$).","question_stem":"If the expected life of the loan is 4 years and $SOFR$ is currently 5.0%, what is the approximate all-in yield to the lender?","seoSlug":"if-the-expected-life-of-the-loan-is-4-years-and-is-currently-1qi8ua"},{"_id":"6a652bb3da22226f77b11f95","id":"PCD_353","difficulty":"hard","question":"A company has $EBITDA$ of \\$85 million, cash interest of \\$17.7 million, and a leverage covenant set at 4.25×.\n\nIf the net debt is \\$272 million, how much 'headroom' does the company have on its leverage covenant expressed as a percentage?","options":["32.8%","1.05×","13.4%","24.7%"],"section":"documentation-covenants-terms","subcategory":"financial-covenants","courseId":"private-credit-debt","stimulus":"A company has $EBITDA$ of \\$85 million, cash interest of \\$17.7 million, and a leverage covenant set at 4.25×.","question_stem":"If the net debt is \\$272 million, how much 'headroom' does the company have on its leverage covenant expressed as a percentage?","seoSlug":"if-the-net-debt-is-272-million-how-much-headroom-does-the-co-1rmsdn"},{"_id":"6a652bb3da22226f77b11fb8","id":"PCD_388","difficulty":"easy","question":"A leveraged loan is priced at $SOFR + 575$ bps with a 1.00% SOFR floor.\n\nIf the current 3-month Term SOFR is 0.65%, what is the all-in coupon rate paid by the borrower?","options":["5.75%","6.40%","7.40%","6.75%"],"section":"documentation-covenants-terms","subcategory":"pricing-terms-economics","courseId":"private-credit-debt","stimulus":"A leveraged loan is priced at $SOFR + 575$ bps with a 1.00% SOFR floor.","question_stem":"If the current 3-month Term SOFR is 0.65%, what is the all-in coupon rate paid by the borrower?","seoSlug":"if-the-current-3-month-term-sofr-is-0-65-what-is-the-all-in-1pnlr3"},{"_id":"6a652bb3da22226f77b1200b","id":"PCD_471","difficulty":"easy","question":"A 'Negative Pledge' clause in a credit agreement primarily restricts the borrower from:","options":["Paying dividends or making distributions to shareholders while the debt remains outstanding.","Granting liens on its assets to any other creditors without the current lender's consent.","Issuing public statements that criticize or disparage the lender's reputation.","Investing capital in any line of business unrelated to its established core operations."],"section":"documentation-covenants-terms","subcategory":"collateral-security-intercreditor","courseId":"private-credit-debt","seoSlug":"a-negative-pledge-clause-in-a-credit-agreement-primarily-res-1ds3wr"},{"_id":"6a652bb3da22226f77b1202d","id":"PCD_0505","difficulty":"easy","question":"A floating-rate loan is priced at $SOFR + 500bps$ with a 1.00% SOFR floor.\n\nIf the current SOFR rate is 0.50%, what is the all-in interest rate paid by the borrower?","options":["5.50%","5.00%","6.50%","6.00%"],"section":"documentation-covenants-terms","subcategory":"pricing-terms-economics","courseId":"private-credit-debt","stimulus":"A floating-rate loan is priced at $SOFR + 500bps$ with a 1.00% SOFR floor.","question_stem":"If the current SOFR rate is 0.50%, what is the all-in interest rate paid by the borrower?","seoSlug":"if-the-current-sofr-rate-is-0-50-what-is-the-all-in-interest-ffx5b9"},{"_id":"6a652bb3da22226f77b12033","id":"PCD_0511","difficulty":"easy","question":"A borrower has a senior secured loan with a coupon of SOFR + 600 bps and a SOFR floor of 1.00%.\n\nIf the current market SOFR rate is 0.25%, what is the all-in interest rate?","options":["7.25%","6.25%","1.00%","7.00%"],"section":"documentation-covenants-terms","subcategory":"pricing-terms-economics","courseId":"private-credit-debt","stimulus":"A borrower has a senior secured loan with a coupon of SOFR + 600 bps and a SOFR floor of 1.00%.","question_stem":"If the current market SOFR rate is 0.25%, what is the all-in interest rate?","seoSlug":"if-the-current-market-sofr-rate-is-0-25-what-is-the-all-in-i-fg0at8"},{"_id":"6a652bb3da22226f77b12058","id":"PCD_0548","difficulty":"hard","question":"A borrower has a senior debt facility of 200.0M. The credit agreement contains a leverage covenant of5.75xand an 'equity cure' provision. At the end of Q3, EBITDA falls to32.0M.\n\nWhat is the minimum equity cure amount the sponsor must inject to restore compliance with the leverage covenant?","options":["\\$20.0M","\\$8.0M","\\$16.0M","\\$1.75M"],"section":"documentation-covenants-terms","subcategory":"financial-covenants","courseId":"private-credit-debt","stimulus":"A borrower has a senior debt facility of 200.0M. The credit agreement contains a leverage covenant of5.75xand an 'equity cure' provision. At the end of Q3, EBITDA falls to32.0M.","question_stem":"What is the minimum equity cure amount the sponsor must inject to restore compliance with the leverage covenant?","seoSlug":"what-is-the-minimum-equity-cure-amount-the-sponsor-must-inje-1hzz34"},{"_id":"6a652bb3da22226f77b1205c","id":"PCD_0552","difficulty":"easy","question":"A 20.0M term loan is issued with a2.0% Original Issue Discount (OID). The interest rate is SOFR + 500 bps and the tenor is 5 years.\n\nHow much cash does the borrower actually receive at closing from this tranche?","options":["\\$20.0M","\\$19.0M","\\$18.0M","\\$19.6M"],"section":"documentation-covenants-terms","subcategory":"pricing-terms-economics","courseId":"private-credit-debt","stimulus":"A 20.0M term loan is issued with a2.0% Original Issue Discount (OID). The interest rate is SOFR + 500 bps and the tenor is 5 years.","question_stem":"How much cash does the borrower actually receive at closing from this tranche?","seoSlug":"how-much-cash-does-the-borrower-actually-receive-at-closing-1i028m"},{"_id":"6a652bb3da22226f77b1206e","id":"PCD_0570","difficulty":"medium","question":"A company has a 'Most Favored Nation' (MFN) clause in its senior credit agreement.\n\nIf the company issues a new incremental 'accordion' facility at a spread of 600 bps, and the original facility's spread is 450 bps with an MFN protection of 50 bps, what is the new spread on the original facility?","options":["600 bps","550 bps","500 bps","450 bps"],"section":"documentation-covenants-terms","subcategory":"incurrence-cov-lite-protections","courseId":"private-credit-debt","stimulus":"A company has a 'Most Favored Nation' (MFN) clause in its senior credit agreement.","question_stem":"If the company issues a new incremental 'accordion' facility at a spread of 600 bps, and the original facility's spread is 450 bps with an MFN protection of 50 bps, what is the new spread on the original facility?","seoSlug":"if-the-company-issues-a-new-incremental-accordion-facility-a-elgd4p"},{"_id":"6a652bb3da22226f77b120cf","id":"PCD_0667","difficulty":"medium","question":"A private debt manager is testing a leverage covenant. 'Consolidated EBITDA' is defined as Net Income plus interest, taxes, and D&A, plus restructuring charges capped at \\$5M. The company has \\$20M in Net Income, \\$10M interest, \\$5M taxes, \\$10M D&A, and \\$8M in restructuring costs.\n\nWhat is the Covenant EBITDA?","options":["\\$50M","\\$45M","\\$58M","\\$53M"],"section":"documentation-covenants-terms","subcategory":"financial-covenants","courseId":"private-credit-debt","stimulus":"A private debt manager is testing a leverage covenant. 'Consolidated EBITDA' is defined as Net Income plus interest, taxes, and D&A, plus restructuring charges capped at \\$5M. The company has \\$20M in Net Income, \\$10M interest, \\$5M taxes, \\$10M D&A, and \\$8M in restructuring costs.","question_stem":"What is the Covenant EBITDA?","seoSlug":"what-is-the-covenant-ebitda-1o8dab"},{"_id":"6a652bb3da22226f77b120d9","id":"PCD_0677","difficulty":"medium","question":"A borrower's interest rate is set at SOFR + 575 bps with a 1.00% SOFR floor.\n\nIf SOFR resets to 0.50% and the loan is priced at 98.00 (OID), what is the current effective coupon rate?","options":["6.25%","6.75%","7.15%","5.75%"],"section":"documentation-covenants-terms","subcategory":"pricing-terms-economics","courseId":"private-credit-debt","stimulus":"A borrower's interest rate is set at SOFR + 575 bps with a 1.00% SOFR floor.","question_stem":"If SOFR resets to 0.50% and the loan is priced at 98.00 (OID), what is the current effective coupon rate?","seoSlug":"if-sofr-resets-to-0-50-and-the-loan-is-priced-at-98-00-oid-w-1o8a4t"},{"_id":"6a652bb3da22226f77b12109","id":"PCD_0725","difficulty":"medium","question":"A 50M RCF has a margin of SOFR + 350 bps and an undrawn commitment fee of 140 bps.\n\nIf the borrower draws20M while SOFR is 4.5%, what is the total annual cost of the facility in dollars?","options":["\\$2.02M","\\$4.00M","\\$1.88M","\\$2.30M"],"section":"documentation-covenants-terms","subcategory":"pricing-terms-economics","courseId":"private-credit-debt","stimulus":"A 50M RCF has a margin of SOFR + 350 bps and an undrawn commitment fee of 140 bps.","question_stem":"If the borrower draws20M while SOFR is 4.5%, what is the total annual cost of the facility in dollars?","seoSlug":"if-the-borrower-draws20m-while-sofr-is-4-5-what-is-the-total-pvgmjt"},{"_id":"6a652bb3da22226f77b12138","id":"PCD_0772","difficulty":"easy","question":"In a 'Maintenance' vs 'Incurrence' covenant comparison, which of the following is true of Incurrence covenants?","options":["They are typical of mid-market bank-arranged senior loan facilities generally.","They provide lenders with a quarterly early warning signal of credit deterioration.","They are only tested when the borrower takes a specific action like incurring new debt.","A breach occurs automatically the instant EBITDA falls below a specified minimum threshold level."],"section":"documentation-covenants-terms","subcategory":"financial-covenants","courseId":"private-credit-debt","seoSlug":"in-a-maintenance-vs-incurrence-covenant-comparison-which-of-qpxeqd"},{"_id":"6a652bb3da22226f77b12163","id":"PCD_0815","difficulty":"medium","question":"A direct loan of 50M has a 1.00% SOFR floor and is priced at SOFR + 575 bps.\n\nIf the current SOFR rate is 0.50% and the loan is marked at 98.0 (fair value), what is the current yield?","options":["6.89%","7.12%","6.75%","6.38%"],"section":"documentation-covenants-terms","subcategory":"pricing-terms-economics","courseId":"private-credit-debt","stimulus":"A direct loan of 50M has a 1.00% SOFR floor and is priced at SOFR + 575 bps.","question_stem":"If the current SOFR rate is 0.50% and the loan is marked at 98.0 (fair value), what is the current yield?","seoSlug":"if-the-current-sofr-rate-is-0-50-and-the-loan-is-marked-at-9-1g2kg2"},{"_id":"6a652bb3da22226f77b12169","id":"PCD_0821","difficulty":"medium","question":"A borrower has a 100M loan at SOFR + 500 bps. To hedge interest rate risk, the borrower enters into a 3-year interest rate swap where they pay 4.00% fixed and receive SOFR.\n\nIf SOFR rises to 6.00%, what is the borrower's effective interest rate?","options":["4.00%","9.00%","11.00%","10.00%"],"section":"documentation-covenants-terms","subcategory":"pricing-terms-economics","courseId":"private-credit-debt","stimulus":"A borrower has a 100M loan at SOFR + 500 bps. To hedge interest rate risk, the borrower enters into a 3-year interest rate swap where they pay 4.00% fixed and receive SOFR.","question_stem":"If SOFR rises to 6.00%, what is the borrower's effective interest rate?","seoSlug":"if-sofr-rises-to-6-00-what-is-the-borrower-s-effective-inter-m43190"},{"_id":"6a652bb3da22226f77b1219f","id":"PCD_0875","difficulty":"hard","question":"A \\$500M CLO collateral pool generates \\$18.75M in annual interest income. The total cost of the rated debt tranches and management fees is \\$11.15M.\n\nIf the unrated equity tranche is \\$50M, and the pool suffers a 2% annual default rate with 65% recovery, what is the adjusted annual yield for the CLO equity holders?","options":["5.4%","15.2%","11.7%","8.2%"],"section":"documentation-covenants-terms","subcategory":"collateral-security-intercreditor","courseId":"private-credit-debt","stimulus":"A \\$500M CLO collateral pool generates \\$18.75M in annual interest income. The total cost of the rated debt tranches and management fees is \\$11.15M.","question_stem":"If the unrated equity tranche is \\$50M, and the pool suffers a 2% annual default rate with 65% recovery, what is the adjusted annual yield for the CLO equity holders?","seoSlug":"if-the-unrated-equity-tranche-is-50m-and-the-pool-suffers-a-1lm66x"}]}

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