BuildUp Capital · Research
Creditworthy small businesses face a widening credit gap. Bank approval rates remain below pre-pandemic levels, banks have pulled back from parts of commercial real estate, and private credit has grown from roughly $500 billion to about $1.3 trillion in five years to fill it. For operators who own real estate but no longer fit a shrinking bank box, non-bank lenders have become the practical source of capital.
The numbers
The Federal Reserve’s 2025 Small Business Credit Survey found the share of employer firms fully approved for the financing they sought remains below pre-pandemic levels. Approval also depends heavily on where a business applies: small banks fully approved roughly 57% of applicants, while large banks and online lenders approved a smaller share. Many owners never apply at all, expecting a denial — a quiet demand that never shows up in approval data.
Since 2023, tighter capital rules and rising concern over commercial-real-estate exposure have pushed banks to step back from whole categories of CRE and small-business lending. Legal and academic observers have described traditional bank loans as “disappearing” for large segments of the market. The result isn’t that creditworthy borrowers vanished — it’s that the lender who used to serve them stopped.
SBA-backed loans remain a strong option for businesses that fit the profile and can wait. But they carry a double layer of underwriting — the bank’s and the SBA’s — and timelines that don’t match a deadline-driven acquisition or a time-critical closing. Creditworthy borrowers routinely fall out of SBA processes for reasons of complexity or timing, not quality.
As banks pulled back, non-bank lenders moved in. U.S. private credit expanded from about $500 billion to roughly $1.3 trillion over five years, with broader estimates putting it between $1.5 and $2 trillion and Moody’s projecting more than $3 trillion by 2028. Direct lending now rivals the broadly syndicated loan market in size. What was once a niche reserved for banks and large institutions is now a mainstream asset class — and much of the growth is concentrated in exactly the lower-middle-market, real-estate-secured lending small businesses need.
The gap is sharpest in high-growth markets — Phoenix, Dallas – Fort Worth, Denver, Salt Lake City, Las Vegas, and Boise — where population and business formation outpace the bank credit available to them, and where operators are unusually likely to own the real estate they work from. For a business that owns property in these markets, a bank decline has become a timing problem with a practical answer: real-estate-secured private capital that underwrites the deal and the exit, not just a credit score. BuildUp Capital lends across nine of these states — Texas, Colorado, Utah, Nevada, Arizona, Oklahoma, Idaho, Montana, and Wyoming.
Figures are compiled from the third-party sources listed below; where estimates vary across sources, ranges are shown. This report is market analysis for educational purposes. Nothing here is an offer of any security or investment, investment advice, or a promise of loan approval.
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