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The Evolution of ESG in Lower Middle-Market Direct Lending

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The U.S. middle market is a significant growth engine of the U.S. economy, accounting for one-third of private sector gross domestic product1. As one of the largest contributors to employment, small companies also play a critical role in the social welfare of society. Historically, U.S. middle market companies relied on commercial banks to meet their debt financing needs. Since the Global Financial Crisis, a combination of regulatory pressure and market dynamics has resulted in an exodus of commercial banks from the space. Dedicated private credit funds have emerged to fill this significant financing gap and participate in building institutionalized and resilient small businesses over time. 

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1 National Centre for the Middle Market (2018): The DNA of Middle Market Growth. The Three Types of Growth Champions and the Factors that Drive Their Success. Available at: (Accessed 24th November 2021).

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