Why Main Street Is Broke, Why Only Select Verticals Are Closing, and Why Serious Advisory Time Has Value

I will explain: Why Main Street Is Broke, Why Only Select Verticals Are Closing, and Why Serious Advisory Time Has Value.

For the last decade, a lot of people on Main Street were sold a simple story: if the banks say no, private credit will say yes. That story worked for a while. Banks pulled back after the financial crisis and the Dodd-Frank era, private lenders stepped in, and yield-hungry institutions poured money into the space. The result was a massive private-credit market that grew to roughly $1.8 trillion to $2 trillion, with most loans structured on floating rates and priced for a world that looked much easier than the one borrowers are operating in now.

Now the bill is showing up. Fitch reported that U.S. private-credit defaults hit 9.2% in 2025, up from 8.1% in 2024, after years when defaults averaged closer to 2% to 3%. The driver is straightforward: most of these loans are floating-rate, tied to benchmark rates that stayed elevated for years, and many borrowers had limited hedging. Debt service got heavier, margins got thinner, and weaker companies ran out of room.

That is why Main Street feels broke even when headlines still talk about available capital. Capital may exist, but it is no longer available on easy terms to businesses with mixed financials, thin liquidity, soft collateral, and no margin for error. What has replaced the old market is a far more selective one. Lenders and private-credit funds are getting more defensive, redemption pressures are rising, major funds have limited withdrawals, and even large banks have started tightening how they lend against private-credit portfolios. That is not what a loose, risk-on market looks like.

This dynamic is also why only select verticals are consistently getting deals done. In a stressed environment, capital chases clarity. That usually means one of a few things: hard assets, durable cash flow, asset-backed structures, infrastructure with visible demand, or sectors large institutions still view as strategic. Moody's has noted that private-credit growth is increasingly shifting toward asset-backed finance and data infrastructure credit, while the broader market grows more cautious. Reuters reported that investor concerns have become especially sharp in software-heavy private-credit books, with AI disruption becoming another reason lenders are rethinking exposure. The takeaway is simple: money is still moving, but it is moving toward cleaner stories, stronger collateral, and better-defined execution lanes.

That leaves a wide gap between what sponsors want and what the market will actually fund. A sponsor may call something growth capital, but if the company is pre-revenue, losing money, or asking for debt before the business has real contracted demand, that is not growth capital in any serious underwriting room. It is venture risk or development risk wearing a nicer suit. In a market with rising defaults and shrinking tolerance for error, that distinction matters. The winners are the operators who already have revenue, already have customers, already have assets, and already know how their deal gets from paper to closing. Everyone else is fighting gravity.

This is where many Main Street sponsors get frustrated. They think the issue is access. In reality, the issue is fit. The market has become a triage business. Deals have to be screened harder, structured tighter, and positioned more intelligently because bad assumptions cost real money now. Private credit's opacity makes this worse. These loans do not trade with daily transparency the way public credit does, and the secondaries market is still small relative to the overall asset base. Even as the broader secondaries market hit a record $240 billion in 2025, Evercore estimated private-credit secondaries at only about $18 billion, roughly 1% of the overall market. That is a polite way of saying liquidity is not there when everyone wants the door at once.

Which is precisely why serious advisory firms should not be expected to work for free on every opportunity that crosses the desk. In 2026, real advisory time is not administrative overhead. It is market triage. It is sorting executable transactions from vapor, protecting counterparties from wasting months, and identifying whether a situation belongs in debt, structured capital, recapitalization, refinance, or a different lane entirely. In a loose market, people can afford to be casual. In this one, they cannot. If a sponsor wants real analysis, real structuring, and real access to closing channels, that process has value because it saves time, preserves credibility, and keeps serious capital focused on what can actually get done. The firms that understand this will survive the cycle. The ones that treat underwriting and structuring like free trial work will stay busy and broke.

The bottom line is not that capital disappeared. It is that the easy capital disappeared. Main Street is feeling the pressure because the old playbook of weak balance sheets, expensive floating-rate debt, and fuzzy capital narratives is colliding with a market that suddenly cares about discipline again. That is why only select verticals are closing. That is why mediocre deals keep dying. And that is why, for firms that actually know how to structure and screen transactions, disciplined paid work is not optional anymore. It is part of the closing path itself.

Michael Andriello Sr - Chairman & CEO -