Private Lending Outlook 2026: What’s Ahead for Real Estate Financing

 As 2025 winds down, many developers, business owners, and real estate investors are asking the same question: What will 2026 look like for financing?

While bank lending remains tight and interest rates show no signs of dramatic drops, private credit continues to fill the gap by providing flexible capital when and where it’s needed most. I’ve seen firsthand how private lending has stepped up in 2025, and all signs point to continued growth into the new year.

With the end of the year approaching, I’m taking time to reflect on the biggest trends I believe will shape private credit in 2026 and ways you can prepare so you can act early and strategically.

2025 Recap: Tight Credit and Strategic Capital

The past year made one thing clear: access to capital has become more selective, but for those prepared to act strategically, opportunity still exists. Interest rates remained elevated throughout 2025, preventing many borrowers from refinancing or expanding through traditional banking channels. Commercial banks continued to be cautious, particularly in commercial real estate (CRE’s) and small business lending sectors, leaving many credit-worthy borrowers without timely access to funds.

As a result, private lending experienced significant growth. Over 50 percent of all small businesses in the U.S. are now securing financing through private lenders, marking a major shift away from conventional bank loans. Private lenders like us at Worth Avenue Capital, stepped in to provide fast, asset-backed capital, helping borrowers move forward when traditional options stalled.

What to Watch in 2026: 4 Key Trends in Private Lending

As I look ahead, these are the trends I see defining the private credit landscape in 2026:

1. Rise of Second Mortgages and Bridge Loans: I’m already seeing more borrowers unlocking equity through second-position loans, especially when refinancing a low-rate first mortgage doesn’t make financial sense.
2. Shift Toward Relationship-Based Lending: Borrowers with strong track records and exisitnig trusted relationships with private lenders will have a clear edge as underwriting continues to tighten.
3. Increased Investor Demand for Private Credit: With traditional fixed-income products under pressure, investors are drawn to private credit for strong yields secured by real assets.
4. Growth in Short-Term, Purpose-Driven Loans: Terms of 6-18 months focused on acquisitions, construction, or bridge-to-sale timelines will continue to dominate the market.

Why Private Credit Will Stay Strong in 2026

I don’t expect any significant easing in traditional lending conditions at the start of 2026. Banks continue to face pressure from regulatory oversight and balance sheet constraints, limiting their ability to lend freely. Meanwhile, this doesn’t change the fact that borrowers need capital that is fast, flexible, and responsive to the realities of the market.

Private lenders like us, are uniquely positioned to assess deals quickly and structure financing solutions that align with real business needs. This agility, combined with a deep understanding of market timing, makes private credit a compelling and necessary option for many looking to fund projects or operations in 2026.

Planning Ahead: How Borrowers Can Prepare Now

If you expect to seek capital in Q1 or Q2, now is the time to get organized. I recommend tidying up your financials, securing updated property valuations, and outlining your expected capital needs in advance. Don’t wait until January.

Most importantly, stay connected or get connected with a private lender. Relationships are increasingly important in this environment, and working with someone who knows your business can significantly accelerate funding timelines when opportunity strikes.

WAC’s Position Going Into 2026

I and my Worth Avenue Capital team will continue to actively lend across real estate, second-position mortgages, and business-backed transactions. Our lending footprint spans the Northeast, Florida, and select national markets, and I remain focused on opportunities where a relationship-driven approach can make the greatest impact.

As traditional capital remains slow and selective, our clients value our ability to move quickly, structure creatively, and lend with an understanding of both risk and opportunity. If you’re planning to raise capital in early 2026, let’s connect now. Year-end is the ideal time to position your financing strategy for a strong start.

Don’t Wait to Build Your 2026 Strategy

I’ve been working in the industry for over 36 years, and today more than ever I can say private lending is no longer an “alternative.” It is a core capital tool for today’s entrepreneurs, developers, and investors. It’s a strategic tool that serious developers, investors, and business owners are using to navigate an unpredictable financial landscape. As banks continue to tighten their lending criteria and delays become more common, those with established private credit relationships are best positioned to act decisively when opportunities arise.

Looking ahead to 2026, I expect demand for flexible capital to increase across multiple sectors. Whether you’re acquiring property, funding renovations, or managing cash flow,  having a private lender on your side provides the speed and adaptability required in today’s market.

But private lending works best when it’s part of a proactive plan and not a last-minute scramble. That’s why now is the time to assess your goals, understand your financing options, and build a capital strategy that positions you for success in Q1 and beyond. If you’re ready to discuss how private credit can support your 2026 goals, reach out to me today.