For decades, if you needed construction financing in the US, you went to a bank. That’s no longer the whole story. Private credit has fundamentally reshaped how commercial real estate gets financed, and for sponsors and developers, the choice of lender now matters as much as the terms on the term sheet. 

We recently sat down with Louis Lebovits, CEO of BridgeCity Capital, and Max Saidman, our Managing Director of Debt Finance in New York, to get into the detail. Watch the full conversation here. 

How private credit changed US CRE lending 

The shift began after the 2008 financial crisis. Regulatory reforms increased capital requirements and changed banks’ appetite for higher-leverage CRE lending. Private debt funds stepped in, attracting institutional capital seeking risk-adjusted returns. 

But banks didn’t disappear, they repositioned. Many now provide financing to private lenders at 60–65% loan-to-cost (LTC), rather than competing directly at 75–80%. 

As Louis explained: “The banks said – why should we be giving direct deals at 75 or 80%? We could take a step down, sit lower in the stack and let the private credit funds take a little bit more risk.” 

Higher rates have also accelerated this shift. According to Mortgage Bankers Association data reported by Commercial Observer, private lenders accounted for approximately 34% of US construction financing in 2025, up from 20% in 2023. 

What borrowers should look for in a private credit lender 

Private credit covers very different lenders: those with committed balance sheet capital and development experience, asset managers deploying institutional money, and funds raising capital for individual transactions. Those differences often become clear when a project runs into difficulty. 

Disciplined lenders focus on reset values, meaningful sponsor equity, and exits that work at current rates. They may not win every competitive process, but their approach matters when plans change. 

Before choosing a private credit lender, borrowers should ask: 

  • Is the capital committed, or still being raised? 
  • How quickly are construction draws processed? 
  • What comparable transactions has the lender recently closed? 
  • How would the lender respond to a construction delay? 

As Louis asked: “If there’s a stop work order for 45 to 60 days – do they automatically put you in default, or are they there to work with you?” 

A competitive term sheet matters. So does understanding how a lender operates when things don’t go to plan. 

For Max, one differentiator stands out: “Banks have balance sheets, so there’s an element of more transparency – a clear path to understanding where that capital comes from, which I think is important for borrowers who need to know that lenders are going to be there for the long term.” At OakNorth, that combination, balance sheet certainty with the speed and flexibility of a private credit approach, is what we try to bring to senior CRE lending. 

Where private credit lenders are focusing 

Multifamily in prime urban locations remains a focus for private credit, with intense competition for quality deals. LTC ratios have approached 90% in some processes, while preferred equity can reduce sponsors’ common equity contributions to less than 10%. That changes the economics, but leaves less room for delays, rising costs, or weaker exits. 

Office is more selective, with lenders assessing individual buildings rather than the asset class as a whole. Well-located retail with strong rental income continues to attract capital. 

Pressure remains in parts of the Sunbelt, where multifamily acquisitions made in 2021 and 2022 at low rates face refinancing challenges. Extensions can buy time, but without a credible execution plan, they simply defer the problem. 

Recourse is changing too. As discussed in the conversation, non-recourse structures have become more common in private credit, while some banks now offer limited guarantees of 25–50% rather than full personal recourse. 

The outlook for US CRE financing 

Private credit is now an established part of US CRE financing. Banks are increasingly partnering with private lenders as well as competing with them. 

As Max put it: “There’s always going to be a fit for both banks and private credit across the long term.” 

The next 12–18 months could expose the difference between disciplined underwriting and aggressive assumptions. Deals at reset values, in strong locations, with well-capitalized sponsors are likely to remain attractive. Those relying on cheap debt and thin equity may face further pressure. 

For borrowers, the takeaway is straightforward: treat lender selection with the same rigor as deal underwriting. More financing options also mean greater variation in how lenders make decisions and support projects. 

At OakNorth we lend $3 million to $65 million+ on senior CRE debt across construction, bridge, value-add, and acquisition, nationwide. We make our own credit decisions and work directly with sponsors and developers.

Source: Commercial Observer / Mortgage Bankers Association, June 2026. Quotes attributed to OakNorth’s October 2026 webinar, The New Lending Stack.