The US lending market isn’t broken. But it is no longer structured the way it was, and that matters most in the $5–50 million range. 

If you’re raising $10 million, $25 million, or $40 million to acquire a business, recapitalize, or finance a development, you’re operating in the segment that quietly powers economic growth. And over the past two years, that segment has shifted in ways that are easy to underestimate. 

How the lower middle market changed after the 2023 bank failures 

When Silicon Valley Bank collapsed after a $42 billion single-day deposit run, it became the second-largest bank failure in US history. Signature Bank followed within days. First Republic fell weeks later, in the largest bank failure since 2008. Combined, more than $500 billion in assets disappeared from the system. 

The headlines focused on deposits and contagion. But something more specific changed underneath: the institutions that actively lent into the lower middle market exited the field. 

These were banks that understood growth businesses. They moved quickly. They were comfortable underwriting sponsors and operators who didn’t fit neatly into institutional frameworks. They specialized in the part of the market between small business lending and large syndicated finance. 

When they disappeared, capital did not vanish – but conviction in the $5–50 million segment did. 

Today, capital is still available. Regional banks continue to lend, but approval processes are longer, leverage is tighter, and recourse structures are heavier. Federal Reserve surveys through 2023 and 2024 consistently show tightened standards for C&I and commercial real estate loans, particularly for smaller and mid-sized borrowers. Large banks remain active, but their focus is naturally on larger tickets; deploying $100 million at a time is simply more efficient than deploying $15 million. 

The segment is not empty. It is underserved.  

Execution risk in $5–50 million financing 

What has emerged is not a capital shortage, but a structural change in how capital behaves. And that shift shows up most clearly in execution. 

In the past, speed was an advantage. Now, it is often the differentiator. 

You find an acquisition target. The numbers work. Strategically, it makes sense. But financing stretches to 60 to 90 days, and certainty of close begins to erode. A rigid loan-to-value cap forces a late-stage restructure. Conservative leverage is accepted not because the asset demands it, but because reducing execution risk becomes more important than optimizing structure. 

Over time, that friction changes behavior. Sponsors widen pricing to hedge uncertainty. Growth businesses become more cautious. Opportunities that depend on decisiveness become harder to capture. 

In competitive markets such as New York, Boston, and DC, execution risk is no longer an operational detail. It is competitive strategy. 

Why the $5–50 million financing gap is structural 

It would be easy to frame the current gap as cyclical – a function of rates, liquidity, or macro volatility. But the lower middle market does not suffer from a lack of opportunity. Assets are repricing. Growth businesses still need capital to acquire, reposition, and scale. 

What has changed is the supply side. 

The banks that specialized in this segment are gone. The largest institutions are not structurally focused here. That is not a temporary tightening. It is a structural misalignment between the needs of $5–50 million borrowers and the institutions currently supplying capital. 

If the gap is structural, the response must be structural too. 

A specialist approach to $5–50 million growth lending 

OakNorth entered the US market in 2023 after building a specialist bank in the UK focused on the “missing middle.” Over the past decade, we have deployed more than $21 billion to growth businesses operating between small business lending and large institutional finance – supporting over 61,000 jobs and helping build more than 36,000 homes in the process. 

We built that experience around one segment: $5–50 million transactions. 

In the US, we apply the same focus. Since launch, we have deployed more than $2.5 billion across commercial real estate and C&I, concentrating on deals that require speed, structure and certainty. 

We typically close in two to four weeks. We underwrite context, not just policy thresholds. Every borrower presents directly to our Credit Committee, and we make decisions early and transparently.