Private credit is moving well beyond traditional direct lending. As competition has intensified and managers look for new sources of opportunity and diversification, asset-based finance (ABF), infrastructure credit, specialty finance and other complex strategies are taking a larger role in private credit portfolios. These strategies can open access to a much broader range of borrowers, assets and cash flows, but they also introduce a level of operational complexity that many existing private credit models were not built to handle.
The opportunity is substantial. McKinsey estimates that the addressable market for private credit in the U.S. could exceed $30 trillion, with asset-based finance, infrastructure, residential mortgages and commercial real estate among the areas expected to see greater participation from nonbank lenders. Of those assets, it estimates $5 trillion to $6 trillion could move off bank balance sheets over the next decade. According to the same research, ABF-focused closed-end funds raised about $27.1 billion in 2025, or 16.4% of closed-end private credit fundraising, up from 10.6% in 2024. The gain came in a year when the overall total fell 16%.
But expanding into these strategies changes more than the investment portfolio. A manager accustomed to administering a relatively concentrated portfolio of corporate loans may suddenly need to account for hundreds or thousands of underlying assets, multiple cash flow streams, different collateral types and more complex structures. The implications extend across data, accounting, reporting and the wider operating model.
Rethinking the Operating Model for ABF
The real operational challenge with ABF is whether an operating model built around traditional private credit can support a fundamentally different level of portfolio granularity. Many private credit operating models are designed around the investment or loan as the primary unit of record. That approach can work well for a corporate loan book, where activity can be monitored and reconciled position by position. ABF can look very different. A single investment may represent an entire pool of loans or receivables, each generating data and cash activity that ultimately need to flow through accounting, valuation and investor reporting.
The pace of activity changes too. Many ABF structures, particularly warehouse and other revolving facilities, have draws and paydowns weekly or even more frequently. Each draw has to be funded and each paydown applied, and that activity flows through to loan balances, interest accruals, fund cash and reporting. An operating model built around a monthly cycle can fall behind quickly. Tracking and reconciliation often need to move to weekly, and sometimes daily, cycles to keep records accurate and deliverables on time. Before a strategy goes live, managers should confirm that whoever runs operations, whether an internal team or an administrator, understands the full scope of the work and has the expertise, processes and procedures to support that frequency.
Managers can accommodate some of that complexity by adding spreadsheets and additional review processes. But as the strategy grows, those one-offs can become harder to sustain. Each new portfolio, originator or servicer may introduce another source of information that needs to be incorporated into the existing process, increasing the amount of time teams spend moving, reconciling and validating data.
A more scalable model starts with the underlying information. High-profile losses in 2025 involving double-pledged collateral showed what can happen when lenders rely on borrower-reported data instead of verifying it at the asset level. Before determining how an ABF strategy will fit into existing accounting and reporting processes, managers need to understand what asset-level data they require, where it will come from, how it will be standardized and validated, and where the authoritative record will sit. With that foundation in place, accounting, cash reconciliation and reporting can draw from consistent information rather than relying on separate processes to produce each output. Teams can also identify exceptions earlier and focus their attention where review and judgment are actually required.
As ABF portfolios grow, the ability to maintain consistent data, controls and reporting becomes part of the infrastructure supporting the investment strategy itself. The operating model therefore becomes a consideration not only at launch, but in how the strategy develops over time.
Build for the Portfolio you Expect to Have
One of the more difficult decisions for managers entering ABF is how much operational infrastructure to put in place before the strategy has reached scale. Building too far ahead can add unnecessary cost and complexity, while waiting too long can leave teams redesigning processes while managing a growing portfolio.
The answer depends less on the size of the portfolio at launch than on how the strategy is expected to develop. A relatively small portfolio may require sophisticated infrastructure if it involves multiple originators, frequent asset-level activity or complex reporting. That assessment can also help managers determine which capabilities need to sit in-house and which may be better supported by an administrator or specialist provider. The appropriate balance of internal expertise, technology and external support will depend on the strategy and how its operational requirements are expected to evolve.
Pressure-testing the Operating Model
There is no single point at which an ABF operating model becomes too complex. Instead, pressure tends to build as portfolios add assets, originators, structures and reporting requirements. Looking beyond whether current processes are working can help managers understand how the model might respond to the next stage of the strategy.
A few questions can help frame that assessment:
Taken together, these questions can help managers identify where operational constraints may emerge before they begin to limit the strategy. As private credit continues to expand beyond traditional direct lending, decisions about people, technology and service providers will increasingly need to develop alongside the investments themselves.
Suntera provides fund administration, loan administration and loan agency services to private credit managers. Working alongside in-house teams, Suntera takes on the routine loan and data work so managers can keep their own people focused on the decisions that need judgment. For facilities with frequent draws and paydowns, that work includes daily tracking and reconciliation.
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Harvey Tian
HEAD OF LOAN OPERATIONS
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