US-domiciled private credit vehicles owed banks $349 billion at the end of 2025, according to a Federal Reserve report published on October 16, 2026. The report highlights that private credit funds can count interest as income even when borrowers pay with additional debt (Payment-in-Kind, PIK) rather than cash. By early 2026, about 10% of Business Development Company (BDC) loans were actively using PIK interest, up from 6% in 2022. This practice allows companies more time to pay, but funds, which often borrow from banks, still face cash payment expectations from their lenders, potentially creating cash flow pressure. The Fed also corrected its classification of these bank loans, previously assigned to foreign financial companies, making the financing more transparent.