Software Lending Volume Dropped in 2026
Private credit lenders shifted focus toward existing debt portfolios amid concerns over AI-driven market disruption.
Updated on Oct. 9, 2026 in Software
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Private equity-backed direct lending for software companies declined in 2026, falling to 15% of total volume compared to 22% in 2025. This retrenchment reflects a broader pivot as lenders prioritized managing existing portfolios over initiating new software deals.
Why it matters
The decline suggests lenders are hedging against potential AI-driven disruption to subscription-based business models. With billions in debt set to mature in 2027 and 2028, the market has favored maturity extensions over aggressive new capital deployment.
Software companies accounted for 12% of deal count and 15% of volume in 2026, marking a significant downturn from the 27% volume share seen in 2020 and 2022. Recent activity has been dominated by massive debt maturity extensions, including $4.3 billion for Proofpoint and $1.66 billion plus €450 million for Sophos.
The players
Proofpoint
A cybersecurity firm that recently utilized amend-and-extend agreements to manage $4.3 billion in first-lien debt.
Sophos
An enterprise security software provider that extended its maturity on $1.66 billion and €450 million in loans.
Imprivata
A digital identity company that restructured $1.2 billion in first-lien debt to push out near-term maturities.
Comvest
A private credit firm providing capital for debt refinancing, including a $350 million loan for Calero.
The details
Borrowers are currently utilizing amend-and-extend agreements, a financial restructuring tool that allows companies to push out loan maturity dates while often adjusting interest rates or covenants to appease current creditors. Investment bankers are increasingly tapping dozens of lenders to secure these refinancings, such as the $350 million loan Comvest provided to Calero. This mechanism signals a defensive posture as firms attempt to clear their balance sheets of looming obligations without triggering default events.
Timeline
2020 and 2022: Software deals reached a recent peak of 27% volume.
Q1 2026: AI-induced worries drove changes in private credit lending.
July 2026: Proofpoint completed an amend-and-extend for $4.3 billion.
Early October 2026: Sophos completed an amend-and-extend on its debt.
2027 and 2028: Billions in software loans are set to mature.
The Tech Race
The 2026 contraction marks a departure from the historical peak in private credit software lending from 2020 and 2022, as lenders move from aggressive growth to portfolio preservation. This pivot suggests an industry-wide reassessment of software as a risk-free asset class.
For software companies, this shift indicates that securing new capital will be more difficult and potentially more expensive for the foreseeable future. Borrowers should expect lenders to prioritize debt restructuring over new project financing until the long-term impact of AI on software revenue models is clear.
The takeaway
The sector has shifted its focus from growth to defensive balance sheet management as maturity walls approach in 2027 and 2028. Watch the refinancing terms of future deals to gauge whether the credit market's confidence in subscription-based software models is stabilizing.
Further reading
For more on the financial underpinnings of the industry, read the latest coverage in Software.
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