Q2 2026 Performance: Repayment, By Design

In June 2026, $74.6 million of principal moved from borrowers on Percent's marketplace back to the investors who funded them, the largest single repayment month in the platform's history. No one at Percent decided to release it, and no investor asked for it. Under these offerings, no investor could have asked. Deals reached their contractual maturity dates, borrowers paid, and principal went back on the schedule it was always on.

June was the heaviest month of a heavy quarter. Percent funded $113.8 million in Q2 2026 and returned $137.5 million of principal to investors over the same three months. Assets under management (AUM) closed the quarter at $346.9 million, up 23.9% year over year (an increase of $67.0 million) and below where it stood at March 31. The balance stepped down because repayment outran new issuance.

The quarter's private credit headlines described a different mechanism entirely. Several of the industry's largest funds received withdrawal requests well above the caps in their quarterly buyback programs and returned a fraction of what investors asked for. Capital left those vehicles because investors asked for it. Capital left Percent's marketplace because deals came due.

Q2 2026 By The Numbers

All metrics are for Q2 2026 (April 1 – June 30, 2026) unless otherwise noted. Population is all deals facilitated on Percent's marketplace.

_{Note: Net return after losses (charge-offs) for the twelve months ended June 30, 2026 (Q2 2026 LTM): 11.9%; Net returns after losses (charge-offs) and fees (servicing fees) for Q2 2026 LTM: 10.5%. Both figures are calculated as aggregate net interest paid to investors divided by average AUM outstanding over the period, across all deals facilitated on Percent's marketplace — not asset-based deals only. They are platform-level aggregates, unaudited, and stated before any advisory fee. They are not the performance of any Separately Managed Account, Percent Blended Note, or other advisory product, and they do not represent the return of any individual investor, whose results depend on which deals they held and when.}

Repayment Is the Product

Percent's offerings are not a pooled vehicle. There is no fund from which investors request withdrawals, no shared cash pool, no periodic tender window and no pro-rated queue. Investors hold positions in individual deals. Each deal has a stated term and a contractual maturity date, and principal returns to the investor as that deal amortizes (pays principal down in installments) or repays, when a borrower performs.

The book of business is built to pay itself back on a short clock. Q2 2026's offerings carried a 16.26% weighted average coupon rate (the stated interest rate on the deals) and a 16.8-month weighted average term, so at any moment a large share of the book is somewhere in the middle of repaying. That makes the maturity calendar, rather than sentiment, what moves the balance, and June was the heaviest month because more deals matured that month. The balance came down while the dollars still at work kept earning: the trailing return finished the quarter higher than it started.

The private credit vehicles that dominated headlines this quarter are a different instrument pointed at a different market: non-traded business development companies, or BDCs — pooled funds that hold long-dated corporate loans and sell shares to investors without a stock-market listing. A BDC investor's route to cash runs through a repurchase program: quarter by quarter, subject to board approval, the fund offers to buy back a slice of shares outstanding, typically capped at 5%, and requests above the cap are filled pro rata — each investor gets back a proportional piece, and the unfilled remainder does not carry forward. In Q2 that mechanism was tested. Across the largest managers, repurchase requests ran from roughly 10% to nearly 17% of shares outstanding against those 5% caps, according to one manager's shareholder letter filed with the SEC; Blackstone's BCRED reported requests of approximately 10% of shares outstanding and Apollo Debt Solutions 16.8%, both preliminary. Not every fund reached its cap — one reported requests for 3.24% of shares outstanding and filled them in full.

That is where the two structures separate, and part of the comparison cuts against Percent. A shareholder in those funds can ask. Every quarter, on a published calendar, they can submit a request, and in Q2 they generally received a portion of it back in cash at net asset value. An investor in Percent's offerings cannot ask at all. There is no manager within them to receive such a request. On demand, these offerings are less liquid than a vehicle that runs a quarterly tender, and investors should plan to hold to maturity. What stands in place of the request is a date, fixed in the instrument at purchase. A repurchase program answers can I ask. A maturity date answers when do I get paid. For a pooled vehicle holding loans that run for years behind a capped quarterly offer, that answer is neither fixed nor frequent. Here it is written into the instrument, and in Q2 those dates delivered $137.5 million of principal, on the schedule set when each deal was syndicated (offered and sold to investors on the platform).

For an investor who cannot wait for that date, Percent's secondary market has been live since February 2026. A position can be listed for sale, and another accredited investor can buy it at a price the two agree on. A listing is an offer, not an exit — a sale happens only if a buyer is found at a price the seller accepts, and neither is guaranteed. Activity is early, and we will report it as the market matures.

Short duration does not change whether a credit performs — it changes when an investor finds out. What it does change is the shape of the book: short, secured, amortizing deals return capital continuously rather than on a manager's calendar.

What Investors Earned

Percent's AUM ended the quarter lower and the return on invested dollars went up. Those two facts are not in tension, because they measure different things. AUM is a snapshot of what is outstanding on a single day, and it fell because June's repayments outran new issuance. The return is measured on the average balance at work across a full year — and that average rose. Average AUM outstanding was $343.6 million for the twelve months ended June 30, 2026, up from $320.7 million for the twelve months ended March 31, 2026.

Net returns for the twelve months ended June 30, 2026 came in at 11.9% after losses and 10.5% after losses and fees, above the twelve months ended March 31, 2026 (11.5% and 10.1%). The path was not a straight line month to month, but the quarter finished above where it began. Over those twelve months investors earned $49.6 million in interest; $13.5 million of it arrived during Q2 2026, a quarter in which investors placed 6,836 individual investments.

The improvement traces to a single month, December 2025, and to nothing discretionary. That month, an $8.7 million charge-off (principal written off as unrecoverable, a realized loss) was booked against legacy corporate loan deals in workout, detailed in our 2025 Year in Review. Every month since has recorded zero charge-offs: January through June 2026, six consecutive months. The December figure stays in the trailing-twelve-month column until it ages out of the window; this quarter's improvement is that arithmetic at work, nothing more.

Detailed Year-over-Year Performance

_{Q2'26 LTM covers the twelve months ended June 30, 2026. Prior columns are calendar years. All figures are unaudited and cover all deals facilitated on Percent's marketplace. Net return percentages are aggregate net interest paid to investors divided by average AUM outstanding for the period, stated before any advisory fee; they are platform-level aggregates and are not the return of any individual investor. Individual return performance on the investor portfolio page is calculated differently and uses the XIRR formula. Past performance is not indicative of future results.}

Transparency in Action: Active Workouts

Workouts, the recovery process that begins when a borrower misses a scheduled interest or principal payment or breaches a term of its agreement, are an expected part of private credit. We manage them actively, and we publish the full roster at the end of every quarter. As of June 30, 2026, 18 borrower programs have deals in active workout status with $52,316,847 outstanding — a balance accumulated across every year since 2018, equal to 2.5% of the $2.07 billion syndicated on the platform over that same period, measured on the same since-inception basis as the loss rates below.

What changed in Q2: two programs entered workout — Quartix and Fenchurch, both listed below.

_{As of June 30, 2026. All figures in USD. Totals: $55,802,397 defaulted, $1,346,017 recovered, $860,467 interest PIK, $3,000,000 charged off, $52,316,847 outstanding. PIK is paid-in-kind: interest accrued and added to the balance rather than paid in cash.}

Three points about how we report this:

• Workout status records an event, not an outcome. A missed payment or a breached term moves a deal into this roster; it does not by itself say how far a situation has progressed. Each program above is documented individually on our Current Workouts page.
• An outstanding balance is not a loss. The $52,316,847 outstanding is excluded from every realized-loss figure we publish, because none of it has been realized as a loss. Some of it will be recovered and some will not; we report recoveries as they land, deal by deal, on our Historical Deals Charged-Off and Recoveries page.
• Our loss rate counts what was actually lost. Percent defines net loss rate as realized charge-offs divided by since-inception issuance. As of June 30, 2026 the asset-based book carries a 2.30% cumulative default rate and a 0.42% net loss rate after recoveries; across all deals on the platform the figures are 3.81% and 0.89%. The asset-based figures describe that subset only and are never platform-wide.

The Book Behind the Number

Cumulative issuance on Percent's public marketplace passed $2 billion during Q2 2026, against $1.95 billion at the end of Q1. The public marketplace has now syndicated $2.07 billion across all deals since 2018, including more than $1.72 billion in asset-based offerings, capital placed with investors who previously had limited access to this asset class.

The book that crossed that mark is built by lending to lenders: Percent holds diversified exposure across hundreds of thousands of underlying businesses and consumers, in secured, amortizing, asset-based structures with short contractual terms. Asset-based notes now represent 77.4% of AUM, up from 68.4% a year ago. Asset-based AUM grew 40.3% year over year while the legacy corporate loan book — where roughly half of the workout exposure above sits — contracted 12.7%. The shift into collateral-backed structures in our core lender finance business has been deliberate and multi-year.

Q2's own issuance carried the same shape: asset-based notes accounted for 89.4% of the quarter's issuance volume. All of that funding came from existing borrowers — rollovers of maturing programs and add-ons to programs already on the platform, drawn from the 78 borrower programs active at quarter-end — and each rollover and add-on is an underwriting decision made again, not an automatic renewal. Percent added no inaugural borrower programs during the quarter; two inaugural programs funded in July, as of July 27, 2026, outside the Q2 reporting period and excluded from every figure above.

The Market This Book Is Pointed At

Three numbers describe it.

U.S. direct lending volume fell from $74.7 billion across 217 deals in Q1 to $33.6 billion across 154 deals in Q2, a decline in volume of around 55%, according to PitchBook/LCD data reported by Private Equity Wire. That pullback is a corporate direct lending story — the same corner of private credit the quarter's redemption headlines came from, and the corner this book has spent years deliberately rotating away from.

Capital kept arriving even as deployment slowed. North America-focused closed-end direct lending funds raised $16.25 billion in the second quarter, up from $1.3 billion in the first and the strongest fundraising quarter in two years, according to Preqin figures reported by Private Equity Wire.

The third number is the gap. Private credit fund lenders supply less than 5% of the financing in the global asset-backed finance market, on KKR's estimate. The market itself stood at roughly $6.1 trillion in 2025 and is projected to reach approximately $9 trillion by 2029, on the same estimate. Nearly all of a market that size is still financed by someone other than private credit. That gap is the opening Percent has been building for since 2018, and the growth of the asset-based book above is what moving into it looks like.

Percent in the Spotlight

The same news cycle that filled the quarter's headlines kept coming to Percent for perspective. Coverage during the quarter:

• Global Finance put the asset class through a stress test in "Private Credit Stress Test: What Breaks And What Holds," with Prath Reddy on the record. (April 22, 2026)
• Future Nexus asked "What is Really Going on With Private Credit," with Prath Reddy quoted throughout. (April 30, 2026)
• ABF Journal named Prath Reddy a 2026 Innovator in its annual Legends & Leaders issue, one of ten honorees recognized for driving change in asset-based finance (May 9, 2026), and examined how infrastructure and AI are reshaping credit in "The Intelligence Architecture: How AI and Infrastructure Are Redefining Finance." (May 13, 2026)
• Alternative Credit Investor reported Prath Reddy's appointment as Chief Executive Officer in "Percent appoints co-founder Reddy as new CEO." (June 18, 2026)

Since the quarter closed:

• Percent's partnership with Trillium Technologies to launch a marketplace for compute credit investments was reported by Alternative Credit Investor (July 23, 2026) and FF News (July 27, 2026).

Looking Forward

The thesis has not changed in eight years, and Q2 is what it looks like when it works. Capital came back this quarter because deals came due — the least photogenic thing a credit book can do, and the one that matters most. It was also the quarter co-founder Prath Reddy became CEO; the thesis above is the one he helped build from the start.

Q3 picks up where June left off. New borrower programs are funding again, the maturity calendar keeps running, and the asset-backed market that private credit has barely reached remains the one this platform was built for. We will report next quarter the way we reported this one: every figure and every workout, in whatever condition the book is in.