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Capital Row
InsightsFor lenders and financing partners

A software borrower’s revenue is its customers’ credit.

Software loans were marked down this year and have only partly recovered, and the distress has moved to the borrowers’ customers. What the record shows, and the evidence a borrower can assemble before the credit committee asks.

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Financing providers: join the acquisition financing panel

For lenders · The exposure
21%

of private credit issuance since 2020 has gone to software companies, roughly, and 16 percent of leveraged loan issuance. A credit book is long software whether it chose to be or not.

Federal Reserve Board, FEDS Notes, August 11, 2026. Both markets stood at about $1.4 trillion at the end of 2025.

For lenders · Where the risk has moved

A borrower’s revenue is its customers’ credit. We could not find anyone who publishes guidance on that.

We looked for published guidance on how a software borrower’s customer concentration or end-market exposure should be treated in underwriting: from the rating agencies, the bank regulators and the loan market’s trade association. We did not find any. If it exists, tell us and we will correct this page.

26%
Healthcare providers’ share of August 2026 liability management transactionsThe largest single group, ahead of software and IT services at 11 percent each. For healthcare software, these are the borrower’s customers.
87.73
Software loan bid at the end of August 2026, percent of parUp from a June low of 85.65, and still below January’s 95.20.
39%
Private credit deals in 2025 that capped non-recurring add-backsDown from 47 percent in 2024 and 66 percent in 2023.
8
General principles that replaced the interagency guidance on leveraged lendingThe OCC and the FDIC rescinded the 2013 guidance on December 5, 2025. The Federal Reserve did not join.

PitchBook LCD, September 2, 2026. A law firm’s annual private credit deal-terms study, reported February 12, 2026. OCC Bulletin 2025-44, December 5, 2025. Default rates are not quoted here: the published rates differ by up to six times on methodology.

For lenders · What we can discuss

The evidence a borrower has assembled, and the questions it helps answer.

Any lender-required valuation or assurance work is separately scoped and commissioned.

01
The borrower’s customers

Concentration, retention and contract terms, and the condition of the end market the revenue depends on.

02
Earnings, traced

Revenue reconciled to bank deposits, and each add-back marked supported or unsupported.

03
What it is not

Non-attest preparation. It is not a quality of earnings report, and nothing here substitutes for work a lender is required to commission.

For lenders and financing partners

The borrower’s customers, read before the credit committee asks.

Capital Row reads a software borrower the way its customers’ market will: concentration, retention and contract terms, with earnings traced to source. Any lender-required valuation or assurance work is separately scoped and commissioned.

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Read by a person. Financing providers who want to be on the acquisition financing panel can say so in the same note.