Capital Advisory & Financial Strategy, August 2025

Overview:

• The July 2025 Senior Loan Officer Opinion Survey (SLOOS), released Aug 4, shows that lending standards have eased compared to 2024 but remain tighter than long-term averages. This continues to affect SMB access to debt financing and influences go-to-market timelines.
• The NFIB Small Business Optimism Index reached 100.3 in July 2025, up 1.7 points from June and above the 52-year average of 98. The Uncertainty Index stood at 97, reflecting improved growth outlook but ongoing caution.
• On Aug 7, 2025, an Executive Order instructed regulators to expand 401(k) investment options to include private equity, private credit, and other alternative assets, potentially opening new capital channels for SMBs.

Market Size & Growth 

• U.S. commercial and industrial (C&I) loans totaled approximately $2.868 trillion as of Aug 8, 2025, highlighting the scale of bank-driven corporate credit supply.
• Estimated at about $2.2 trillion in assets under management (AUM) in 2025, private credit has become a significant alternative to traditional bank lending.
• The SBA 7(a)/504 dashboard provides current approval figures, loan sizes, and geographic distribution for SMB-focused financing.

Key Growth Drivers

• The Equifax/PayNet Small Business Lending Index (SBLI) stood at 142.8 in Aug 2025, up 8.3% year-over-year despite a 2.2% month-over-month decline.
• U.S. investment-grade bond funds saw $11.6 billion in inflows in the week ending Aug 6, 2025, the largest weekly increase since 2020.
• July 2025 PMI data shows U.S. services expanding (55.7) while manufacturing contracted (49.8), influencing sector-specific capital allocation.

M&A Overview

• Global M&A value reached $2.6 trillion year-to-date as of Aug 4, 2025, up 28% from the prior year, with AI-related and U.S. megadeals leading activity.
• Investment-grade acquirers are relying more on equity and cash rather than debt to avoid credit rating downgrades amid high interest rates.
• Defaults on private debt rose to 5.5% in Q2 2025 from 4.5% in Q1, according to Fitch, impacting deal structuring and loan terms.

AI’s Role

• Rillet secured $70 million in Series B funding and reported doubling its annual recurring revenue in 12 weeks by automating financial closes and KPI tracking.
• Ramp, now valued at $22.5 billion, is expanding AI agents for spend control, budgeting, and compliance across more than 40,000 businesses.
• Nitrogen (formerly Riskalyze) launched an AI meeting notetaker, illustrating the growing integration of AI tools in advisor workflows.

Competitive Landscape

• While direct C&I loan growth is flat, bank lending to non-bank lenders has surpassed $1 trillion, increasing banks’ indirect exposure to private credit markets.
• A Goldman Sachs survey found reduced institutional interest in private credit, with 37% of respondents planning to allocate to hedge funds in the second half of 2025.
• Private-credit managers are launching open-ended funds to attract individual investors, with market size estimates ranging from $1.7 trillion to $2.2 trillion.

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Sources: Federal Reserve, NFIB, White House, Financial News London, SBA, Equifax/PayNet, Financial Times, S&P Global, Reuters, WSJ, Kitces AdvisorTech, Bloomberg

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