Private Credit And The Reshoring Wave: Financing America's Manufacturing Revival

Key Takeaways

• Private credit is emerging as a key reshoring enabler, offering manufacturers faster and more flexible access to capital than traditional syndicated loans—critical for meeting government incentive deadlines and outpacing competitors.
• Flexibility and customization are major advantages, as private lenders can tailor repayment structures, drawdowns, and equity participation to match the long timelines and capital intensity of reshoring projects.
• The trade-off comes with higher costs and tighter oversight, but for manufacturers prioritizing speed, adaptability, and strategic execution, private credit often justifies the premium as a catalyst for U.S. manufacturing growth.

The push to return manufacturing to U.S. shores, driven by fragile supply chains, shifting geopolitics, and ambitious domestic industrial policy, has shifted from boardroom talk to a surge of reshoring projects. From precision components to semiconductors, plants are breaking ground at a pace not seen in decades. But amid the strategy lies a pressing question: how to finance construction, workforce development, and other reshoring operations quickly and flexibly enough to seize the moment.

While syndicated loans remain a staple for large-scale borrowers, private creditis emerging as a decisive enabler for reshoring. Once a niche alternative, it has grown into an over $1.5 trillion global market with clear benefits for manufacturers of all sizes seeking financing options that align with the particular financing needs of reshoring.

Why Private Credit Fits the Reshoring Agenda

Speed and certainty are the most immediate advantages. Manufacturing development is often tied to government incentives—such as the CHIPS and Science Act, the Inflation Reduction Act, and state subsidy programs—which can impose strict timelines or otherwise be subject to phase-outs and volatile political headwinds. Private credit can close in weeks as opposed to months for a syndicated process. That can determine whether a grant is secured or lost—or whether a manufacturer can outrace its competitors competing for specialized domestic workforces, favorable new supply chains, and government contracts prioritizing domestic production.

Structural flexibility is equally vital. Reshoring projects often require heavy upfront investment, years before steady cash flow. Private lenders can tailor repayment to project realities, such as milestone-based drawdowns, long interest-only periods, or cash sweeps post‑production ramp-up, in contrast to the more rigid amortization and covenant demands common in syndicated loans. Furthermore, while prospective borrowers should carefully consider the costs and benefits of such approaches, private lenders are often more receptive partners to creative equity structures as a portion of their anticipated return on financing transactions than traditional bank lenders.

Specialized risks also make private credit attractive. Projects may involve advanced robotics, energy‑intensive methods, or other niche exposures and regulatory risks that traditional lenders may approach with skepticism. Private credit funds often field sector-focused teams capable of underwriting such risks without imposing prohibitive equity demands or overly restrictive covenants.

The Trade-offs: Cost, Liquidity, and Governance

Private credit is not cheap. Higher interest rates and fees, and the possible addition of equity compensation for the lender, reflect the lender's concentrated risk and bespoke structuring. Borrowers must weigh whether the premium is justified by, among other things, speed and flexibility.

Liquidity is another consideration. Private loans are not broadly tradable; refinancing can be difficult, particularly when options were not plentiful to begin with or when a project encounters delays, increased costs, or other obstacles to profitability. If market conditions or project economics change, this lack of optionality can be constraining.

The close relationships that make private credit adaptable can also bring potentially intrusive governance. Enhanced reporting, board observer rights, and other operational oversight are common. Some management teams value the dialogue; others may resist the visibility granted to lenders.

Strategic Financing in a Strategic Moment

For manufacturers looking to reshore, capital constraints, bureaucracy, and inflexible financing can derail projects with long‑term strategic value for their businesses and the U.S. industrial base. Private credit can sidestep these obstacles by offering rapid, customized capital focused on the particular business, and execution of the particular reshoring project rather than market convention.

The trade-off is clear: higher costs in exchange for faster, more flexible capital. For many of our reshoring manufacturers, especially those racing to meet incentive deadlines or counter competitors, it's a trade worth making. In an era when speed and flexibility rival cost of capital in importance, private credit may well become the financial engine behind America's manufacturing resurgence.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.