The Federal Reserve has detailed nearly $1.5 trillion in outstanding private credit loans as of the end of 2025, revealing how a major source of business financing has been incorporated into official U.S. financial accounts after years of incomplete classification.
In an October 16 research note, Federal Reserve economists reported $1.4935 trillion in private credit loans worldwide held by the vehicles covered in the new framework, including approximately $1.458 trillion owed by U.S. businesses. The findings explain accounting changes introduced with the September 2026 release of the Financial Accounts of the United States, rather than announcing $1.5 trillion in newly originated loans.
The distinction matters because private credit lending was already substantial, but much of it was previously recorded under broader liability categories or attributed to other financial sectors. The new classifications allow researchers to identify private credit borrowing and the institutions supplying that financing more precisely.
What the Fed Changed
The Federal Reserve’s Financial Accounts, commonly called the Z.1 report, now separately identify private credit vehicles and two financial instruments: private credit loans and shares issued by private debt funds.
Private credit generally involves privately negotiated business loans originated by nonbank investment vehicles rather than traditional banks. The Fed’s definition covers direct corporate lending, asset-backed financing, real estate debt, infrastructure lending and other privately negotiated business loans.
Previously, loans from U.S.-domiciled private credit vehicles to nonfinancial corporations were generally recorded as miscellaneous liabilities. Some loans to noncorporate businesses were classified as bank lending, while the financial vehicles making those loans were not fully represented as separate sectors.
The new accounting framework addresses these gaps using confidential Securities and Exchange Commission Form PF filings, regulatory reports, fund information and commercial financial datasets.
According to Section 3 of the Fed’s official analysis, the previous treatment understated nonfinancial business debt as measured through the Financial Accounts’ debt instruments and obscured the composition of borrowing. The changes are methodological. They do not mean businesses suddenly incurred an additional $1.5 trillion in debt when the new tables were introduced.
Foreign-domiciled private credit vehicles also remain within the existing rest-of-world sector because their cross-border financial positions were already recorded there. Their private credit exposures are now more clearly identified.
Inside the $1.5 Trillion Market
The Federal Reserve’s Table 6 places total private credit loans outstanding at $1.4935 trillion in the fourth quarter of 2025, compared with $1.2536 trillion in 2024 and $1.0426 trillion in 2023.
That represents an increase of $239.9 billion, or approximately 19.1%, between the end of 2024 and the end of 2025, according to an Investozora calculation using the Fed’s published figures. The increase reflects growth in the measured outstanding loan stock across the two periods, not a measure of net new originations alone.
Private debt funds held $532.2 billion of these loans at the end of 2025, followed by business development companies with $455.9 billion. Foreign-domiciled vehicles accounted for another $375.5 billion, including lending to U.S. businesses and financial positions reflected in the rest-of-world sector.
Investozora Original Calculations
Analysis of Federal Reserve private credit data shows a $239.9 billion increase in outstanding loans during 2025, while U.S. business borrowers accounted for approximately 97.7% of the measured loan stock at year-end.
$1,493.5B − $1,253.6B
($1,493.5B − $1,253.6B) ÷ $1,253.6B × 100
($1,087.9B + $222.7B + $147.8B) ÷ $1,493.5B × 100
Methodology: Investozora calculated the dollar increase and annual percentage growth by comparing the Federal Reserve’s year-end 2024 and 2025 outstanding private credit loan balances. The U.S. borrower share combines loans to domestic nonfinancial corporations, noncorporate businesses, and financial businesses, divided by the worldwide private credit loan total. The denominator includes foreign borrowers. These figures measure outstanding loan stocks, not annual originations or defaults.
Source: Federal Reserve, Introducing Private Credit into the Financial Accounts of the United States , October 16, 2026, Table 6. Investozora calculations use reported end-of-period loan balances, in billions of U.S. dollars, not seasonally adjusted. Results are rounded to one decimal place.
Interval and tender offer funds held $76.3 billion, while U.S. asset-backed securities issuers, including middle-market collateralized loan obligations, held $53.7 billion. The Fed’s balance sheet tables also show that private credit vehicles held approximately $2.66 trillion in total financial assets. That broader figure includes corporate equities, debt securities, deposits and other assets, and must not be confused with outstanding private credit loans.
Which Businesses Owe the Money
A closer reading of the Federal Reserve’s borrower classifications reveals an important distinction within the headline total. Of the $1.4935 trillion in private credit loans outstanding at the end of 2025, nonfinancial U.S. corporations owed $1.0879 trillion. Noncorporate businesses owed $222.7 billion, while other U.S. financial businesses owed $147.8 billion.
Foreign borrowers accounted for the remaining $35.1 billion. Combining the three domestic borrower groups gives approximately $1.4584 trillion in loans to U.S. businesses, an Investozora calculation based on Table 6. That means approximately 97.7% of the measured worldwide loan stock was owed by U.S. business borrowers, including financial businesses.
The distinction explains why the publication discusses roughly $1.5 trillion in U.S. private credit lending even though the broad instrument total includes some loans to borrowers outside the United States. It also means that $1.5 trillion should not be described entirely as debt owed by U.S. nonfinancial companies.
The Fed’s separate nonfinancial business debt calculation identifies approximately $1.31 trillion in private credit obligations at the end of 2025, representing about 6% of total nonfinancial business debt of $23.29 trillion. These measures differ because the broad loan total includes lending to financial businesses and foreign borrowers, while the nonfinancial business debt measure excludes them.
How Business Leverage Changes
The revised figures have consequences for how economists assess corporate leverage and broader financial stability. The Fed found that incorporating private credit lifts the ratio of nonfinancial business debt to gross domestic product by approximately five percentage points in recent years compared with a measure excluding those loans.
However, the document’s analysis concludes that including private credit does not substantially alter the longer-term direction of business debt trends. The debt-to-GDP ratio remained below its median level since 2012 and had been declining since 2020, even after incorporating private credit.
This is a central qualification: the revised accounting reveals a larger measured stock of business debt without independently establishing an equivalent deterioration in borrowers’ financial condition.
The latest available Financial Accounts, released September 11, show private credit loans representing 7.1% of nonfinancial corporate debt in the second quarter of 2026. The share was nearly equal to nonmortgage lending from depository institutions. The different percentages reflect different reference periods and borrower populations rather than a contradiction.
Banks and Investors Remain Exposed
Although private credit is originated through nonbank vehicles, traditional banks remain important providers of financing to those vehicles. The Fed’s Table 1 identifies approximately $349 billion in depository institution loans to U.S.-domiciled private credit vehicles at the end of 2025.
Those loans represent one connection between the banking system and private credit funds. They should not be added directly to the $1.458 trillion in private credit loans to U.S. businesses as though they represent separate borrowing by the same end borrowers.
Private debt funds also draw capital from institutional investors, including pension funds and life insurance companies. The Fed identified $689.4 billion in private debt fund shares outstanding at the end of 2025. State and local government employee pension funds held $195.2 billion, households and nonprofit organizations held $155.9 billion, and life insurance companies held $99.1 billion.
The new framework makes these investor exposures more visible and provides a clearer picture of how capital travels from investors, through lending vehicles, to businesses.
For households, the accounting changes also correct earlier measurement issues. Some assets held by private credit vehicles had been residually attributed to households, while certain direct fund investments were omitted. The adjustments improve the allocation of assets and liabilities across sectors but do not themselves establish a change in individual household wealth.
What the Figures Cannot Prove
The expanded reporting does not eliminate uncertainty surrounding private credit. In its methodology discussion, the Fed acknowledges that some private debt funds file information annually rather than quarterly, requiring estimates and interpolation. The classification of funds also relies partly on investment strategies, fund names and information from commercial databases.
Detailed borrower characteristics are not available for every fund. To estimate borrower-sector allocations, researchers apply distributions drawn from business development company and middle-market CLO datasets to other private credit vehicles. The report further cautions that some syndicated loans may remain within the private credit estimates because the datasets cannot fully distinguish the two categories.
Certain private funds may also fall outside Form PF reporting, while the dataset used for middle-market CLOs may undercount activity. These limitations mean the published totals are constructed financial statistics, not an exhaustive loan-by-loan census of every private credit transaction. The note also does not establish that the newly identified debt is experiencing higher default rates or that a financial crisis is imminent.
The Federal Reserve’s May 2026 stability report had already described private credit as a significant financing source, estimating approximately $1.4 trillion in loans using data from the second half of 2025. Because the reports use different measurement frameworks, their headline amounts should not be interpreted as a direct measure of market growth.
The October 16 note’s most consequential contribution is the detailed explanation of how private credit has been integrated into the nation’s financial accounts. That integration gives policymakers, investors and researchers a stronger statistical basis for tracking business borrowing, nonbank leverage and financial connections that had previously been harder to observe.
It also establishes an important limit on the new figures: better recognition of existing financial obligations does not automatically mean those obligations or their underlying risks have suddenly increased.
