Private debt: Chance for Industrials and Scale-Ups in a challenging debt financing environment

Competition for corporate loans has intensified in recent months. Swiss industrial SMEs are facing a number of challenges: On the one hand, new US tariffs and geopolitical trade conflicts are weighing on export prospects, while on the other hand, parts of the sector are struggling with declining creditworthiness , limited access to traditional (re)financing, and a strong Swiss franc. In this environment, private debt — in other words, financing that is provided outside of traditional bank loans or public capital market issuances  — is gaining importance. This form of financing offers a strategic alternative, particularly for medium-sized, export-oriented industrial companies and growth-oriented scale-ups, enabling them to successfully implement transformation projects despite tight bank lending environment.

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Key Takeaways

• Private debt can close financing gaps caused by the tightening of bank lending.
• Flexible structures and rapid availability make private debt an attractive solution, especially for industrial companies and scale-ups facing short-term challenges.
• The Swiss private debt market is still less mature than, for example, in the US but it is growing dynamically.
• Professionally prepared financing concepts significantly improve the chances of accessing private debt.

What is private debt – and why is it gaining in importance?

Private debt comprises debt capital that is lent directly to companies by institutional investors, private debt funds or specialist asset managers. Unlike bank loans, financing terms are tailored to individual needs and are more flexible, which is particularly helpful for medium-sized companies facing short-term challenges.

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Various factors have led to excess demand in the Swiss bank lending market. Private debt financing can often still offer solutions even when bank financing is already restricted by internal bank or regulatory requirements. The trend toward using private debt is already much more advanced in the US and the EU. International players such as Partners Group, Apollo, and Ares are focusing specifically on the growing Swiss market.

How can industrial companies and scale-ups benefit from private debt?

Medium-sized industrial companies can benefit from private debt in particular when their existing bank financing has reached its limits, but they have further capital requirements or want to take advantage of strategic opportunities. Private debt often allows for higher leverage ratios, longer durations, and less restrictive covenants. It can also be structured as subordinated or supplementary to existing bank financing.

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For scale-ups, private debt offers a way to secure growth capital for market expansion, technology development, or acquisitions, even though they often do not yet have the ability to borrow from banks. This can be done without diluting shareholdings.

What are the success factors for accessing private debt?

1. A stable, forward-looking, and focused business model despite market uncertainties.
2. A clearly defined financing strategy with realistic milestones.
3. A transparent “debt story” that convinces investors of the viability of the business.
4. High-quality planning documents and processes.
5. A professional process for selecting investors and drafting contracts.

We have been supporting companies for many years in the development and implementation of successful financing solutions. With in-depth market knowledge, a broad network, and a structured approach, we help them close financing gaps, implement growth plans, and optimize their capital structure — regardless of economic or geopolitical challenges.

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Conclusion
Private debt can be a strategic financing instrument for Swiss industrial companies and scale-ups. For CFOs and Boards of Directors, this means that private debt expands their strategic options, even in the event of short-term and unexpected events, without directly changing the company's shareholdings. With professional preparation and proper use, private debt can help drive strategic goals, even in a challenging market environment.

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More information about Debt Advisory.

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