Why Private Credit Matters More Now Than Ever
We’ll admit it upfront. We are a private credit fund, so of course, we have a point of view. However, when you examine the data, it is not just our perspective. It is a market reality. Private credit is no longer a niche alternative; it has become a mainstream investment option. It is becoming essential finance, especially for small and mid-sized businesses that traditional lenders are leaving behind.
We have written before about the value of private credit, but given the pace of change in today’s lending environment, it is worth revisiting. Recent data from both the United States and Canada points to a clear and widening gap between the financing that businesses need and what traditional institutions are willing or able to provide.
That gap is not theoretical. It is measurable, material, and growing. For alternative lenders, this represents both a responsibility and a structural opportunity: to step in where banks are stepping back.
A Global Market on the Rise
Private credit is no longer a side story. According to Preqin, global private credit assets under management exceeded $ 1.5 trillion in 2024 and are projected to surpass $ 2.3 trillion by 2028¹. In North America, alternative lending volume reached over 284 billion dollars last year². In Canada, the market is smaller but expanding rapidly, with total transaction volumes expected to double to more than 4.2 billion dollars by 2028³.
This growth reflects more than investor appetite. It reflects borrower demand for capital that is faster, more flexible, and more aligned with the realities of running a business today.
Credit Is Tight, But Business Needs Have Not Gone Away
United States
In early 2025, the Federal Reserve reported that banks had significantly tightened lending standards for small businesses⁴. Loan demand appeared to fall to its lowest level in over a year. But the story behind the headline is more revealing.
According to the 2024 Small Business Credit Survey, 44 percent of small firms did not apply for financing because they believed they would be denied⁵. Among those who did apply, only 14.6 percent received approval from large banks⁵.
This is not a reduction in business need. It is a reflection of discouragement. What appears to be declining demand is, in many cases, actually redirected demand. Borrowers still need capital. They are simply looking elsewhere to find it.
Canada
The gap in Canada is just as clear. Small and mid-sized businesses contribute more than 50 percent of national GDP⁶ but receive only around 16 percent of total bank lending allocations⁷.
Even more striking, alternative lenders account for less than 1 percent of SME debt financing⁸.
This is not just a funding shortfall; it is a significant issue. It is a structural mismatch between economic contribution and financial access. And with more than 300,000 Canadian small businesses expected to transition ownership within the next five years⁹, the urgency to close that gap is rising.
Private Credit Is Designed for This Moment
The divide between borrower needs and bank risk appetite has always existed. But it is now broader and more consequential.
Private credit strategies, especially those focused on secured loans to small and mid-sized businesses, are well-positioned to fill that void. Here is why:
- Speed. Private credit offers more timely decision-making and closings.
- Flexibility. It accounts for real-world complexity, including seasonal businesses, special situations, or ownership transitions.
- Access. Our lending is always secured by tangible assets, supported by a deep understanding of the business itself. We are partnership lenders, working closely with borrowers to structure solutions that are practical, aligned, and built for resilience.
In the United States, alternative lending volume reached 284.5 billion dollars in 2024, with annual growth exceeding 11 percent². In Canada, the market is expected to grow at a rate of nearly 18 percent through 2028³.
It’s Not Just Capital. It’s Impact.
Private credit is not just moving money. It is making a measurable difference.
In 2024, private credit supported more than 811,000 jobs in the United States and contributed 145 billion dollars in direct GDP impact¹⁰. When indirect and community effects are included, the total economic impact reaches $370 billion¹⁰.
Among borrowers, 91 percent cited speed, 82 percent loan size, and 77 percent flexibility as top reasons for choosing private credit over traditional sources¹⁰. These are not just financial transactions. They are solutions to business challenges.
A Regulatory Climate in Transition
Both Canada and the United States are recognizing the importance of SME lending, and the role alternative lenders play in strengthening access to capital.
In the United States, the Small Business Administration facilitated over $56 billion in loans in fiscal 2024¹¹. However, defaults on SBA-backed loans have more than doubled since 2021, rising from $570 million to over $1.6 billion¹². This puts pressure on public programs and underscores the need for reliable, private lending alternatives.
In Canada, programs like the Canada Small Business Financing Program continue to expand¹³. At the same time, recent reforms to interest rate caps and ongoing modernization of the Business Development Bank of Canada indicate a growing openness to responsible, non-bank financing solutions¹⁴.
These changes are not substitutes for private credit. They are signals that the system is adapting and that private lenders have a meaningful role to play.
Why This Matters to Us
At Garrington, we provide secured credit to small and mid-sized businesses across North America. Our loans are backed by tangible assets and supported by a disciplined underwriting process. We operate with short durations to preserve capital and maintain liquidity, and we take the time to understand the businesses we support.
We are not transactional lenders. We are partners. Our approach is designed to offer more than capital, it provides clarity, collaboration, and confidence in uncertain times.
Final Word
Private credit is not a temporary alternative. It is a permanent, necessary complement to a financial system that no longer serves every borrower equally.
The demand is there. The capital is ready. And the opportunity to build something lasting has never been stronger.
Sources
¹ Preqin, Global Private Credit Report 2024
² Yahoo Finance, U.S. Alternative Lending Market Report 2024
³ Research and Markets, Canada Alternative Lending Forecast 2024–2028
⁴ Federal Reserve, Senior Loan Officer Opinion Survey (Q1 2025)
⁵ Small Business Credit Survey, 2024 (Federal Reserve Banks)
⁶ Statistics Canada, Key Small Business Statistics 2023
⁷ OECD, SME and Entrepreneurship Policy in Canada
⁸ C.D. Howe Institute, “Scaling Up is Hard to Do: Financing Canadian Small Firms” (2023)
⁹ Canadian Federation of Independent Business, Succession Planning Survey
¹⁰ American Investment Council, Economic Impact of Private Credit (2024)
¹¹ SBA FY 2024 Lending Report
¹² Barron’s, “SBA Loans Are Going Bad,” 2024
¹³ Innovation, Science and Economic Development Canada, CSBFP Annual Review
¹⁴ Government of Canada, Budget 2023 Legislative Proposals
