·The Dash
What is private credit, and why it yields 15–25% a year
A plain-language breakdown of private credit: who lends to whom, where the high yield comes from, and what the risks are.
Private credit means lending to businesses directly, bypassing public markets and bank bonds. For decades this segment was available mostly to banks and large institutional investors. Today private investors can access it too.
Who lends to whom
In the classic model, a company goes to a bank for money. But banks don’t lend to everyone: small and medium businesses — especially in emerging markets — are often refused, or funded slowly and only against real-estate collateral.
A private credit fund steps into that gap. It finances vetted businesses directly — against turnover, trade deals, and working capital. The business pays interest on that capital, and that interest is what forms the fund’s investor yield.
Where the high yield comes from
The 15–25% annual yield in this segment comes from several factors:
- Illiquidity premium. Capital is committed for a term and can’t be withdrawn at will — investors are paid more for that.
- Direct lending. There’s no chain of intermediaries between investor and borrower, each taking a cut.
- Short, secured deals. Trade finance turns over quickly, and loans are backed by collateral and the business’s cash flow.
What the risks are
High yield always comes paired with risk. The main ones:
- Borrower default — a business may fail to repay. Collateral reduces losses but does not guarantee full recovery.
- Illiquidity — capital is locked for the investment period, and early exit is limited.
- Currency and country risk in emerging markets.
How it works at Dash
Dash opens this segment to private investors through a single fund: a $10,000 minimum, a target return from 15% per annum in USD, and quarterly distributions. Dash’s own capital sits at the bottom of the stack and absorbs losses first — before any investor capital.
Returns are targets and are not guaranteed. Private credit investments are illiquid and carry the risk of partial or total capital loss. This material is informational and is not an offer or individual investment advice.