Q1 2026 Performance: Steady Through the Stress Test
The quarter private credit got tested in real time. Percent's platform performed exactly as designed.
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Q1 2026 was a consequential quarter for private credit. Two major fraud-driven bankruptcies. The first industry-wide wave of retail BDC redemption gates. A software and AI-driven repricing. And a geopolitical shock that spiked oil prices and took expected Fed rate cuts off the table. Against that backdrop, Percent's marketplace did what it was built to do.
Q1 2026 saw $131.7 million funded across 65 deals, at a 17.0% current weighted average coupon rate and an average investment term of 14.7 months. Lender finance deals led issuance for the quarter, representing 93.9% of all deal issuance by volume and 80.1% by deal count, the continuation of a strategic shift underway since 2024.
Assets Under Management reached a new all-time high of $367.0 million by quarter's end, a 4.8% increase from Q4 2025. The platform has now seen 793 deals fully repaid, returning over $1.57 billion in principal and $121.5 million in interest to investors who previously had limited access to this asset class.
Q1 2026 By The Numbers
All metrics are for Q1 2026 unless otherwise noted. Asset-based notes drove most of the quarter's AUM growth, roughly ~98% of it — the result of a multi-year shift from corporate loans into collateral-backed structures in our core lender finance niche.
Note: Net return after losses (charge-offs) for Q1 2026 LTM: 11.5%; Net returns after losses (charge-offs) and fees (servicing fees) for Q1 2026 LTM: 10.1%. Past performance is not indicative of future results. Private credit investments involve risk, including loss of principal. Returns are not guaranteed. Percent offerings are available only to accredited investors. Investments are facilitated by Percent Securities, LLC, a FINRA-registered broker-dealer. Performance metrics and platform availability are subject to regulatory disclosures; past results do not guarantee future outcomes.
Expanding the Borrower Ecosystem
Q1 2026 welcomed two new borrowers to the Percent platform:
- Mint Funding ($1.9M across 2 deals): Secaucus, NJ–based provider of short-term working capital to a range of industries, with terms of 3 to 12 months. Mint's clients typically seek capital for near-term cash flow needs, equipment investment, or time-sensitive purchases.
- Pier Special Opportunities (Pier Music Royalties Fund LP) ($0.2M across 1 deal): U.S.-based limited partnership providing investors economic exposure to royalties, fees, and other income streams from music-related intellectual property. The fund purchases contractual rights to future cash flows from songs, recordings, catalogs, and related music assets.
Against heightened market volatility, Percent has focused new origination on U.S.-based borrowers with business models resilient to both tariff impacts and potential recession scenarios.
Investor Marketplace Performance
In the twelve months ending Q1 2026, investors earned $45.7 million in interest. Net returns came in at 11.5% after losses, 10.1% after fees.
The step down from our 2024 net returns of 14.9% reflects the $8.7 million in principal Percent charged off in Q4 2025, detailed in our 2025 Year in Review. Those charge-offs came from legacy corporate loan deals in workout — exactly the structure we have been strategically moving away from as we doubled down on asset-based lending in the lower middle market. Q1 2026 recorded zero charge-offs, and asset-based securities now represent 78.3% of our AUM, up from 64.7% two years ago. The mix is working.
Detailed Year-over-Year Performance
Transparency in Action: Active Workouts
Workouts are an expected part of private credit, and we proactively manage them to optimize investor recoveries. As of March 31, 2026, 16 borrowers have deals in active workout status across the platform.
Key observations from our workout portfolio:
- Deal-structure patterns. Of the 16 borrowers with deals in active workout, 10 are senior corporate loans and 6 are asset-based notes. Corporate loans drive a disproportionate share of workout situations relative to their share of AUM, which is why our platform strategy is asset-based first.
- Underwriter concentration. A handful of international corporate-loan underwriters account for the majority of active workouts. New origination has focused on U.S.-based borrowers under a tighter screen.
- Recovery in progress. Active recovery efforts continue across all workout situations, with timelines and outcomes varying by deal structure and jurisdiction.
For complete transparency, we maintain detailed reporting on our Current Workouts and Historical Deals Charged-Off and Recoveries pages.
Market Insights & What Lies Ahead
Three forces shaped Q1 2026.
A geopolitical shock and rate reset. U.S. and Israeli operations against Iran began in late February, and the IRGC declared the Strait of Hormuz closed on March 2. Oil rose more than 70% in the quarter. The 10-year Treasury yield ended Q1 near 4.32%, and the market steadily priced out Fed rate cuts — from two-to-three expected at year-start to zero by quarter-end.
A software and AI-driven repricing. The S&P 500 closed Q1 down 4.3% and the Nasdaq 100 down 5.8%. But the real story was beneath the index: Growth stocks fell nearly 10% while Value gained 2.1%, and the software industry declined nearly 30% from its October 2025 peak as investors repriced AI-driven obsolescence risk. For private credit, the fallout was direct — Medallia, one of the largest Thoma Bravo–backed software credits, was marked down across BDCs and moved to non-accrual at Blackstone's BCRED by quarter-end.
A private credit credibility test. Two fraud-driven bankruptcies defined the quarter's institutional story. Federal indictments were unsealed against First Brands Group executives for a multi-year triple-pledging scheme involving $11.5 billion of obligations; Jefferies disclosed ~$715 million of exposure through its Leucadia unit. Tricolor Auto's bankruptcy trustee sued its auditors and warehouse lenders over allegedly double-pledged collateral. Non-traded BDCs received $13.9 billion in retail redemption requests against $7.4 billion honored — the first industry-wide synchronized gating event in the product's history. Moody's revised the U.S. BDC sector outlook to negative.
Even the asset class's most prominent voices were candid. Jamie Dimon, on JPMorgan's Q1 2026 earnings call, flagged "some weakening in underwriting" but was emphatic: "I don't think it's systemic. It almost can't be systemic at that size relative to anything else." Apollo's Marc Rowan called the coming period a "shakeout" — and said it was "foreseeable."
Visible, Not Vast
The problem in private credit is real. It is also specific. The mega-managers who pushed institutional products into retail channels through non-traded BDCs and interval funds are working through legitimate stress. A subset of funds loaded their books with concentrated software exposure. The credit cycle will sort the durable operators from the opportunistic ones.
Percent doesn't sit in that part of the market. We don't syndicate through retail wholesaling networks. We don't operate interval funds gated at 5% per quarter. We don't have concentrated exposure to the large SaaS names now being marked down. What we do is different — and the quarter validated it.
Percent's Platform: Built for Moments Like This
Q1 2026 was a stress test in practice. The data:
- No unusual outflows. Monthly inflow/outflow patterns through Q1 were consistent with prior quarters. Investors reallocated within the platform as deals matured and new offerings launched, rather than exiting the asset class.
- Captive capital held. Roughly a fifth of our AUM sits in structures like Separately Managed Accounts or Blended Notes. The remaining is deployed in individual deals that investors redeem naturally as they mature or refinance — no one got gated, and no one was waiting in line.
- Short terms did its job. Our issuances in Q1 2026 had a weighted average term of 14.7 months, giving investors natural recalibration windows as risk conditions changed.
- Monthly cash flows continued. ~93.5% of performing AUM outstanding as of end of Q1 2026 is structured to pay monthly fixed-rate coupons as of the end of Q1 2026, which supports steady cash flow through turbulent quarters.
By focusing on lending to lenders, we maintain diversified exposure across tens of thousands of underlying small businesses and consumers, with flexibility to adjust sector exposures as risks evolve.
Structure Over Scale
Resilience stems from structural rigor, not headline yield. As of March 31, 2026, senior asset-based deals on the platform carry a weighted average overcollateralization requirement of ~18.8% and a weighted average advance rate of ~81.2%, providing a conservative structural cushion relative to historical default rates of the underlying portfolios.
These safeguards sit alongside cash reserves that provide immediate liquidity for debt service and covenants requiring borrowers to post additional collateral if underlying assets underperform. This layered defense is particularly important in our asset-based securities, which represented over 90.4% of Q1 issuance volume.
Secondary Markets Are Live
Percent rolled out Secondary Markets in beta to existing platform investors in December 2025, then publicly launched the marketplace in February 2026. The feature lets accredited investors submit indications of interest to buy or sell positions in eligible private credit deals before maturity, with visible order books and orders managed directly from your portfolio. Alternative Credit Investor covered the public launch.
As Nelson put it at launch: "Private credit will never trade like public markets, but investors deserve better tools than 'lock it up and wait.'" Prath added: "Liquidity is measured, pricing is transparent, and every transaction requires sign-off from all parties."
Percent In the Spotlight
The last months brought Percent into the center of the private credit conversation:
- The Economist referenced Percent's launch of Secondary Markets as a structural response to the asset class's liquidity question in "Can the secondary market allay private-credit fears?" (April 9, 2026)
- The Information featured Percent commentary on how the BDC redemption wave is reshaping the retail product landscape in "For Blackstone, Private Credit Fears Miss the Big Picture." (April 2, 2026)
- Forbes named Percent to its 2026 America's Best Startup Employers list, recognizing growth and culture through a volatile market. (March 3, 2026)
- Forbes ran a Nelson Chu byline arguing the specialization thesis needs rethinking in the AI era — "We Told Everyone To Specialize—AI Just Proved That Wrong." (March 17, 2026)
- Alternative Credit Investor covered the public launch of Secondary Markets and its implications for liquidity infrastructure. (February 27, 2026)
- Bloomberg Going Private featured Percent commentary contrasting structural discipline with broader market behavior in "Direct Lenders Sacrifice Safeguards To Beat Banks." (January 16, 2026)
- Inc. ranked Percent #27 on the 2026 Regionals Northeast list, a 67% jump from last year's #82 placement and our third consecutive year on the list. (Announced April 21, 2026)
Founder Notes — Now Co-Hosted by Nelson & Prath
Our bi-weekly podcast Founder Notes has evolved. Nelson Chu (Founder & CEO) is now joined by Prath Reddy, CFA (President and Co-Founder) for unfiltered conversations on private credit, fintech, and what building durable infrastructure actually looks like when the market is tested. Listen to Founder Notes
Looking Forward: The Shakeout Is the Point
Q1 2026 will be remembered as the quarter private credit transitioned from adolescent growth to institutional maturity. The credit cycle Dimon sees coming will do the final sorting. Firms that pushed institutional products into retail channels without the infrastructure to support them will continue to pay for it. Firms that loaded their books with concentrated software exposure will face a mark-to-market reckoning. Firms that prioritized AUM growth over underwriting discipline will lose investors to firms that didn't.
That gap is already widening. It's not something to fear — it's how a maturing market is supposed to work.
Percent has spent eight years building exactly for this. Short duration. Asset-based structures. Real-time surveillance. Transparent deal data. An investor-first secondary marketplace. U.S.-focused origination. The playbook wasn't designed for a bull market, and it wasn't designed to chase headline yield. It was designed to deliver what the asset class is supposed to deliver — through cycles.
Thank you for being part of this, and for helping shape the future of private credit, the right way.