The funding gap between the banks and the boardroom

For decades, an Australian business that wanted to fund its next move had one obvious first stop: its bank. For many situations, that is still the right answer. But for a particular kind of business — profitable, ambitious, and facing a decision that does not fit a standard template — the relationship has quietly changed.

Why the banks stepped back

In the years since the global financial crisis, tighter capital requirements and a more cautious regulatory environment have reshaped how the major banks lend. The economics now favour larger, more standardised exposures. Smaller, more bespoke situations — the ones that need judgement rather than a checklist — have become harder for a big balance sheet to justify.

None of this is a failure on the banks' part. It is a structural shift in where their lending is most efficient. But it leaves a gap.

Who sits in the gap

The businesses caught in that gap are not distressed and not start-ups. They are established, cash-generative companies that are simply too large for small-business products and too small — or too "complex" — for the institutional debt markets. When one of them has an acquisition to close on a deadline, a founder looking to exit, or a refinancing that needs to be shaped around the business rather than the other way around, the traditional process can feel slow and ill-fitting.

What fills it

This is the space private corporate credit has grown to serve: direct lending, secured by the business and its cash flows, with structures and timetables built around the situation. For borrowers, it offers flexibility and certainty. For investors, it has become a way to access a domestic, income-generating asset class that was once the preserve of banks.

The gap between the banks and the boardroom is not closing. Understanding it is the first step for any business weighing how to fund what comes next.