A comprehensive comparison of private credit and bank lending for corporate borrowers in Asia Pacific: covering speed, structure, cost, covenants, and what to expect from each.
Published by
Donald Klip | Co-Founder, Global Mortgage Group | Head, GMG Capital Advisory
30 years of institutional finance. Former hedge fund founder. Senior roles at top global investment banks. GMG Capital Advisory arranges private credit and special situations finance of $10M–$100M for operating companies across Asia Pacific.
[email protected] | +65 9773 0273 | Singapore · Hong Kong | Asia-Pacific
The decision to access corporate capital through private credit rather than a conventional bank loan is one of the most consequential financing decisions an Asia Pacific CFO or business owner can make. Yet it is also one of the least well-informed — because most business owners have only ever borrowed from banks and have no direct experience of the private credit alternative.
The question is not whether private credit or bank lending is better in the abstract. It is which is right for your specific transaction, at your specific moment, in your specific market.
Speed and Certainty
Bank lending: A typical mid-market corporate credit process at an Asia Pacific bank takes 8–14 weeks from initial application to drawdown. For time-sensitive transactions, acquisitions, urgent refinancings, working capital crises, this timeline is frequently incompatible with business needs.
Private credit: A well-presented private credit transaction can move from initial conversation to term sheet in 5–10 days, and from term sheet to drawdown in 3–4 weeks. For urgent situations, some private credit lenders can fund in under two weeks.
Deal Size and Accessibility
Bank lending: Banks have been progressively raising minimum deal sizes for mid-market corporate credit. At many major Asia Pacific banks, dedicated relationship banking resources are deployed only for transactions above $50M–$100M.
Private credit: GMG Capital Advisory's focus is the $10M–$100M segment that banks find uneconomic. This is where private credit adds the most value, bringing dedicated credit analysis, bespoke structuring, and principal-level attention.
Structure and Flexibility
Bank lending: Banks apply standardised templates designed for the median corporate borrower. Deviation from the template requires escalation and typically results in delays or refusals.
Private credit: Every private credit transaction is structured around the specific borrower's situation. Repayment schedules are designed around the actual cash flow cycle of the business. Covenants are negotiated to reflect the actual risks of the specific transaction.
Covenants
Bank lending: Bank corporate credit facilities typically include maintenance covenants — financial ratios tested quarterly or semi-annually. A covenant breach, even if caused by a temporary fluctuation, can trigger a technical default.
Private credit: Private credit covenant packages are typically incurrence-based. They are triggered only if the borrower takes a specific action, not by quarterly financial test dates. This gives the business significantly more operational freedom.
Relationship and Access
Bank lending: Corporate credit decisions at major banks are made by credit committees that the business owner does not meet. Issues are communicated through layers of relationship management and credit administration.
Private credit: With a private credit lender, the business owner deals directly with the principals who are making credit decisions. Questions are answered immediately. Issues are resolved in conversations.
Cost
Private credit carries a higher interest cost than bank lending. Private credit lenders are deploying risk capital without the benefit of subsidised deposit funding or regulatory capital frameworks that reduce the cost of bank lending.
However, cost comparisons need to take into account the full picture: the opportunity cost of a deal that falls through because bank financing took too long; the cost of a covenant breach that triggers a bank default; the value of speed, certainty, and flexibility in a competitive business environment; and the cost of monitoring and compliance obligations under a maintenance-covenant bank facility.
For many mid-market corporate transactions, when the full cost comparison is conducted honestly, private credit is not as expensive as the headline rate differential suggests. And for
transactions where bank financing is simply not available, which is an increasing proportion of mid-market corporate deals in Asia Pacific, the comparison is moot.
About GMG Capital Advisory
Donald Klip | Co-Founder, Global Mortgage Group | Head, GMG Capital Advisory
Donald Klip has 30 years of institutional finance experience spanning hedge fund management and senior roles at the world’s top global investment banks. GMG Capital Advisory specialises in arranging and structuring corporate debt financing of $10M–$100M for operating companies, asset owners, and project sponsors where conventional bank lending is unavailable, insufficient, or too slow. We operate across 23+ jurisdictions in Asia Pacific.
www.gmg.asia | [email protected] | +65 9773 0273 | Singapore · Hong Kong
The Debt Desk
Corporate private credit intelligence for Asia Pacific’s $10M–$100M middle market. Published by GMG Capital Advisory. Part of the Private Credit Asia content series.
www.gmg.asia | Read all 41 articles in the series
