The 'Missing Middle' Opportunity in Small Business Lending: Wells Fargo's Strategic Play for Growth and Inclusion

The global small business lending market is undergoing a seismic shift, driven by the urgent need to address the $930 billion financing gap for small and growing businesses (SGBs) in emerging marketsMissing Middles — Collaborative for Frontier Finance^[2]. This gap, often termed the "missing middle," represents enterprises too large for microfinance but too small or risky for traditional bank loans or venture capital. For investors, this segment is not just a moral imperative but a strategic goldmine. With the market projected to grow at a 13% compound annual growth rate (CAGR) to reach $7.22 trillion by 2032The state of small business lending: statistics and trends^[1], the missing middle is becoming a linchpin for long-term investment returns. At the forefront of this transformation is Wells Fargo's Open for Business Growth initiative, a $20 million philanthropic program designed to reshape access to capital for mid-sized businesses while advancing financial inclusion.

The Strategic Relevance of the Missing Middle

The missing middle is a critical yet underserved segment of the global economy. Middle-market businesses—those with 50 to 250 employees—account for $24.2 trillion in annual spendingNew Wells Fargo program is fueling businesses^[3]. However, they face systemic barriers: outdated underwriting criteria, limited access to real-time data, and fragmented financial ecosystems. Traditional lenders often deem these businesses too risky, while venture capital and private equity focus on hyper-growth startups or large corporations. This leaves SMEs in a precarious position, unable to scale operations or weather economic shocks like the ones caused by the pandemicAddressing the “Missing Middle” Challenge in Least^[4].

For investors, the missing middle represents a dual opportunity. First, it is a high-growth market. The U.S. embedded lending sector, for instance, is expected to grow at a 20.4% CAGR through 2031The state of small business lending: statistics and trends^[1], driven by digital-first solutions that cater to SMEs. Second, it aligns with global financial inclusion goals. In sub-Saharan Africa alone, the SME financing gap is $331 billionAddressing the “Missing Middle” Challenge in Least^[4], and addressing it could unlock millions of jobs and stabilize local economies.

Wells Fargo's Open for Business Growth: A Model for Impact

Wells Fargo's Open for Business Growth initiative directly targets these challenges. Launched in 2025, the program allocates $20 million in grants to nonprofit partners like Allies for Community Business (A4CB), which then develop tailored financing solutions for growth-stage SMEs. Unlike traditional loans, these solutions include revenue-based financing, where repayments fluctuate with a business's cash flowMissing Middles — Collaborative for Frontier Finance^[2]. This model is particularly effective for industries like food services, retail, and construction, where revenue variability is high.

A case in point is Onigiri Kororin, a Chicago-based food company that received $210,000 in revenue-based financing through A4CB. The funding allowed the business to triple its kitchen size, hire 25 employees, and secure larger contractsNew Wells Fargo program is fueling businesses^[3]. By 2026, A4CB estimates its programs will create up to 260 local jobsNew Wells Fargo program is fueling businesses^[3]. This approach not only supports business growth but also fosters community resilience—a key metric for impact investors.

The initiative builds on the success of Wells Fargo's earlier $420 million Open for Business Fund, which helped 336,000 small businesses retain or create 461,000 jobs during the pandemicAddressing the “Missing Middle” Challenge in Least^[4]. By prioritizing partnerships with community development financial institutions (CDFIs) and leveraging blended finance models, Wells Fargo is creating a scalable framework for addressing the missing middle.

Financial Inclusion as a Catalyst for Returns

The intersection of financial inclusion and profitability is where the missing middle opportunity shines. According to a 2025 report by the U.S. Small Business Administration (SBA), only 31% of small business loan applicants received all the funding they sought in 2021The state of small business lending: statistics and trends^[1]. This inefficiency creates a vacuum that innovative lenders—both traditional and digital—are racing to fill.

Wells Fargo's focus on revenue-based financing and API-first lending platformsThe state of small business lending: statistics and trends^[1] aligns with broader trends in the sector. By 2026, 40% of the small business lending market is expected to be dominated by API-driven solutionsThe state of small business lending: statistics and trends^[1], which streamline loan applications and servicing. These technologies reduce operational costs and improve risk assessment, making SME lending more attractive to institutional investors.

Moreover, the program's emphasis on financial inclusion resonates with ESG (Environmental, Social, and Governance) criteria, which are increasingly shaping investment decisions. A 2025 study by the Collaborative for Frontier Finance found that SMEs in least-developed countries (LDCs) are 30% more likely to survive economic downturns when they have access to tailored financingAddressing the “Missing Middle” Challenge in Least^[4]. This resilience translates to lower default rates and higher long-term returns for investors.

Conclusion: A Win-Win for Investors and Communities

The missing middle is no longer a niche concern—it is a $7.22 trillion opportunity by 2032The state of small business lending: statistics and trends^[1]. Wells Fargo's Open for Business Growth initiative exemplifies how strategic philanthropy and innovative financing can bridge the gap between SMEs and capital. By prioritizing revenue-based models, digital platforms, and nonprofit partnerships, the program not only addresses systemic inequities but also creates a blueprint for scalable, profitable lending.

For investors, the lesson is clear: the missing middle is where growth and inclusion converge. As traditional lenders retreat from SME markets and digital solutions proliferate, the ability to fund this segment will become a key differentiator. Wells Fargo's approach—combining philanthropy with market-driven innovation—offers a compelling model for those seeking to align their portfolios with both profit and purpose.