Record growth, zero charge-offs, and a strategy built for uncertainty
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Following a strong 2024, Percent has not only maintained momentum but accelerated growth during Q1 2025, further solidifying our position as the leading dedicated private credit marketplace. This performance is particularly noteworthy against the backdrop of increased market volatility, policy uncertainty, and shifting economic narratives.
Q1 2025 set records across our platform with $125.2 million funded across 65 deals—our strongest quarter ever for both deal volume and count. These transactions delivered a 16.2% current weighted average coupon rate with an average investment term of 12.4 months, representing a 41.3% increase in deal count and a 69.7% growth in issuance volume compared to Q1 2024. The impressive growth was primarily driven by our expertise in lender finance and asset-based securities, which accounted for 81.0% of all deal activity.
Assets Under Management (AUM) reached a new all-time high of $300.4 million by quarter’s end, a 7.9% increase from Q4 2024. Excluding our Blended Note products ($47.8 million across all varieties), our core AUM grew to $252.5 million—a 64.6% year-over-year increase.
This robust quarterly performance builds on our market-tested foundation, which has now seen 590 deals fully repaid, returning over $1.1 billion in principal and $59.8 million in interest to investors who previously had limited access to this asset class.
Q1 2025 By The Numbers:
These figures translate into tangible benefits for our valued investors:
- Focused Growth: Our marketplace specializes in lender finance and asset-based lending, with 72.2% of Q1 2025 AUM growth driven by asset-based notes. This provides you with strategically curated investment options featuring embedded downside protection to strengthen your portfolio diversification.
- Enhanced Deal Flow: With a growing pipeline of investment opportunities available monthly, you now have more options than ever to align your investments with your specific risk tolerance and financial goals.
Expanding Borrower Ecosystem
Q1 2025 welcomed five new borrowers to the Percent platform, enhancing our marketplace diversity with specialized expertise across multiple sectors:
New Borrowers
- Lendica ($2.2M across 2 deals): Massachusetts-based AI lender established in 2020 that specializes in providing streamlined and cost-effective financing solutions for small and medium-sized businesses.
- Quartix ($2.0M across 3 deals): North Carolina-headquartered alternative lender that specializes in supply chain finance, buy-now-pay-later loans, and reverse factoring for middle-market companies.
- Ispire Technology ($2.4M across 2 deals): Headquartered in Los Angeles, California, and founded in 2014, Ispire specializes in the research, development, design, commercialization, sales, marketing, and distribution of branded e-cigarettes and cannabis vaping products. Publicly traded company on the NASDAQ under the ticker symbol ISPR.
- Citrusper ($1.5M across 1 deal): Mexico-based industrial producer of citrus-derived products, primarily supplying buyers across the United States for use as ingredients in different products or as finished goods packaged under third-party brands.
- One River ($1.2M across 1 deal): Florida-based provider of financing to small and medium-sized businesses across the U.S.
All note programs for these new borrowers have been structured as asset-based securities, reinforcing Percent’s growing expertise in this private credit vertical. Within asset-based financing, these borrowers span diverse asset classes, offering investors an expanding array of private credit exposure options.
In recent months, amid heightened market volatility, Percent has proactively focused new origination efforts on U.S.-based borrowers with business models that demonstrate resilience to both tariff impacts and potential recession scenarios. This strategic focus aims to provide our investors with more durable yield opportunities regardless of economic conditions.
Investor Marketplace Performance: Consistent Returns during Volatile Markets
In the past 12 months (Q1 2025 LTM), investors earned $30.5 million in interest, with an average return of 13.5% after losses and service fees. This growth demonstrates our consistent ability to generate competitive returns for investors, even in a fluctuating market.
The most striking aspect of this performance data is the consistency of returns over time, with net returns after losses holding steady at 14.9%, despite the exponential growth of our marketplace and through public market volatility, proving the uncorrelated nature of private credit. Even more notably, Q1 2025 marks the fifth consecutive quarter with zero charge-offs, highlighting our disciplined underwriting approach, our efforts on working through recoveries for deals that do enter into workout scenarios, and our proactive portfolio management.
Transparency in Action: Active Workouts
Transparency is foundational to Percent. While workouts are an expected part of private credit, we proactively manage these situations to optimize investor recoveries. Currently, eleven borrowers have deals in workout status, with comprehensive recovery plans underway.
Our ongoing reporting on workout situations reflects our commitment to investor confidence and overall transparency. Several important trends are worth highlighting:
- Recovery Progress: Active recovery efforts continue across all existing workout situations, with different progress and outcomes expectations also based on deal type.
- Deal Type and Underwriter Patterns: The data reveals important patterns by deal type and borrower jurisdiction performance, providing valuable insights to Percent and underwriters on initial screenings and ongoing due diligence efforts.
- Asset Type Resilience: Asset-based securities continue to demonstrate stronger performance with fewer workouts relative to corporate loans, validating our strategic shift toward asset-based deals.
We provide detailed reports and updates on our Current Workouts and Historical Deals Charged-Off and Recoveries pages, ensuring that you have full visibility into our recovery efforts and the performance of our underwriting partners.
Market Insights & What Lies Ahead
The first quarter of 2025 delivered a stark reminder of how quickly market narratives can shift. Against the backdrop of aggressive U.S. tariff policies, persistent core inflation, and tempered Federal Reserve rate expectations, private credit continues to offer compelling opportunities for yield and diversification in an increasingly complex environment.
The immediate effects of the new tariffs were most visible in public markets, with equity and fixed income volatility and rapidly deteriorating business and consumer sentiment. While headline inflation showed signs of easing, the Fed held its policy rate steady and signaled fewer cuts ahead—underscoring a wait-and-see approach in light of growing uncertainty.
At Percent, we’ve seen this unfold in real time. Even as markets digested the tariff shock, investor engagement on our platform remained remarkably stable. We observed no unusual uptick in withdrawals; instead, reallocations happened within the platform, as investors adjusted their strategies to align with updated risk-return expectations ahead of potential recession-driven impacts.
Cost of Capital is Rising Again
After more than a year of steadily declining borrowing costs, the trend reversed sharply in late Q1. The cost of capital on new SMB lending ABS transactions on Percent’s platform spiked to levels approaching 17.0%, nearing the peak seen after the Fed’s last rate hike in mid-2023. This rapid shift signals a reemergence of investor caution and underscores the value of credit quality, cap stack seniority, underlying asset diversification and structural downside protections.
Percent’s Platform: Built for Moments Like This
We’ve deliberately designed Percent for precisely these market conditions. Despite only one-third of our AUM representing “captive capital” locked into structures like Blended Notes, we have not seen any material outflows from the other two-thirds that are free to redeem. This stability stems from several key features that investors have come to value amid uncertainty:
- Our short-duration investments—averaging 9 months—allow for quick recalibration
- Our surveillance infrastructure enables investors to track portfolio performance in near real-time
- 87.8% of deals pay monthly fixed-rate coupons, providing enhanced control and predictable income
By focusing on lending to lenders, we gain diversified exposure across tens of thousands of underlying small businesses and consumers, while retaining the flexibility to adapt sector exposures as risks evolve. We’re actively refining our underwriting standards, limiting exposure to more import-sensitive or tariff-impacted sectors, and focusing on essential, domestically anchored services with more stable cost structures.
Private Credit’s Resilience in Action
Private credit’s reputation for low correlation to public markets is often discussed—now, it’s being tested in real-time. Having successfully navigated the market shocks of COVID-19, the 2022 rate hike cycle, and now this period of policy-driven volatility, Percent enters this challenging phase from a position of strength.
We believe resilience stems from structural rigor, not just headline yield. Our asset-based investment approach incorporates multiple layers of protection that create meaningful buffers against market stress. As of April 18, 2025, the senior asset based deals we have structured carry a weighted average overcollaterization requirement of 18.39%, which translates to a weighted average advance rate of 81.61%, generally considered a conservative loss coverage compared to the historical default rates of the portfolios of the borrowers we engage with.
These structural safeguards are supplemented by additional protective features: overcollateralization requirements that maintain cushions above the note amount, cash reserves that provide immediate liquidity for debt service, and covenants requiring borrowers to post additional collateral if underlying assets underperform. This multi-layered defense strategy is particularly important in our asset-based securities, which represented over 80% of our Q1 issuance volume.
Our surveillance capabilities provide an additional advantage, with weekly and monthly reporting enabling us to identify emerging trends long before they would impact investor returns. This visibility allows for proactive intervention rather than reactive measures. Combined with our conservative underwriting approach that already contemplates recession scenarios, our platform demonstrates how thoughtfully structured private credit can deliver both yield potential and downside protection even in volatile markets.
As policy paths remain uncertain and volatility persists, the demand for alternative, uncorrelated yield is only growing. At Percent, we’re staying the course—focused on sourcing high-quality, structurally sound opportunities within our niche, not because we expect smooth sailing, but because we’ve built a platform designed for these conditions.
Percent In the Spotlight
This quarter, our platform and team were featured in several notable publications, highlighting our expanding reach, evolving focus on asset-based finance, and deep market insight. Here are some of the highlights:
- PitchBook profiled Percent’s evolution to a fully tech-enabled auction system for private credit, highlighting our vision for supporting secondary market trading and serving as independent infrastructure in this rapidly evolving space.
- In Fast Company, Nelson Chu analyzed the real-time impact of new U.S. tariffs on small businesses, drawing on Percent’s lending data to illustrate how policy volatility is disrupting supply chains and raising capital requirements for Main Street.
- ABF Journal featured Percent’s 2025 Private Credit Outlook, which forecasts accelerated growth driven by asset-based financing expansion, tech-enabled underwriting, and increasing diversification across geographies and deal types.
- Business Insider spoke with Nelson Chu about how Percent is capitalizing on the private credit boom while exploring the industry shift toward lending expertise—a trend reshaping career paths across alternative investing.
- Markets Media highlighted Percent’s perspective on democratizing private markets, focusing on our approach to expanding access through asset-based lending and technology-enabled investment models.
Be sure to check out our Founder and CEO’s podcast, Founder Notes with Nelson Chu. Each bi-weekly episode offers an unfiltered look into private credit, fintech, and the realities of building a disruptive platform. From navigating market crises to operational insights and startup lessons, it’s a must-listen for investors, entrepreneurs, and fintech followers alike.
Looking Forward: Positioned for What’s Next
As we move forward in 2025, we remain confident in our ability to navigate an increasingly complex market landscape. Our record results of Q1 demonstrate that our platform’s fundamental design principles—short duration, structural protection, diversification, and transparency—deliver value precisely when market uncertainty is highest.
In a world where volatility is the norm, Percent is built to navigate change—combining data-driven underwriting, short-duration structures, and real-time visibility. With a growing borrower ecosystem, increasing investor engagement, and expanded access to institutional capital, we’re confident that our platform is well-positioned for what’s next.
Thank you for being part of our journey—and for helping shape the future of private credit.