US Private Credit Default Rate Falls in Q3
The default rate dropped to 2.41 percent, though smaller firms and software companies faced higher default activity.
Updated on Oct. 29, 2026 in Economic Indicators
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The US private credit default rate declined to 2.41 percent in the third quarter of 2026, down from 2.51 percent in the prior quarter. The index tracks 746 senior-secured and unitranche loans totaling $205.7 billion.
Why it matters
Private credit performance serves as a gauge for the health of smaller and mid-sized businesses that rely on these non-bank loans for operations. Changes in default rates can signal shifting borrowing costs and liquidity availability that may eventually influence business investment and employment levels.
The Proskauer Private Credit Default Index recorded a 2.41 percent default rate across 746 loans in Q3 2026, down from 2.51 percent in the previous quarter. This represents the performance of $205.7 billion in total original principal.
The players
Proskauer
A law firm that publishes the Private Credit Default Index to track senior-secured and unitranche loan performance.
The details
The index tracks senior-secured and unitranche loans, providing a look at default activity across various company sizes. While the overall rate improved, the data shows a split: default rates rose for smaller companies with EBITDA under $25 million but fell for larger borrowers with EBITDA of at least $50 million. Additionally, software and technology borrowers experienced an increase in defaults during the period, highlighting that risks are not distributed evenly across sectors.
Timeline
The data reflects performance through the end of the third quarter of 2026.
The second quarter of 2026 saw a default rate of 2.51 percent.
Money Landscape
This decline in the quarterly default rate offers a snapshot of credit health within the private debt market. It sits against the backdrop of rising trailing 12-month default rates, suggesting that while the immediate quarter showed improvement, long-term credit pressures remain.
Changes in credit default rates can influence how lenders evaluate risk when offering loans to businesses, potentially affecting capital access for your employer or small business. If you rely on credit for business operations, consult with a financial advisor to understand how shifting industry-specific default risks could impact your credit terms.
The takeaway
While the overall default rate eased, the rise in defaults among software companies and smaller firms with lower EBITDA suggests a uneven credit environment. Business owners should review their current debt obligations and maintain open lines of communication with lenders regarding any potential changes in financing availability.
Further reading
For broader trends on business health and debt, visit the Economic Indicators section.
Source note: This article includes information reported by Alternative Credit Investor.
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