The headline from February was the equity wipeout: roughly $285 billion in software market cap erased, revenue multiples compressed from 10-12x down to around 4x. Painful for public companies. Mostly noise for a $5M ARR SaaS founder.

The second act is not noise.

By late February and into March, the risk moved from equity markets into the credit infrastructure that small and mid-sized companies quietly depend on for runway, refinancing, and exits. Software represents 20-25% of the $3 trillion private credit market. When software valuations get cut in half, the collateral behind those loans gets cut in half too. Lenders noticed.

If you are running a $2M-$25M revenue SaaS or fintech company, the funding environment you were planning around just changed.

Where it shows up at your size

You do not need a PE-backed balance sheet to feel this. Three places it hits companies in your range first.

Venture debt and growth credit get harder. Term sheets that were no-covenant and light-warrant in 2023 are coming back with higher spreads, tighter covenants, and lower advance rates. Some deals are not getting done at all, particularly for companies that cannot clearly explain how they withstand AI disruption or tariff-inflated costs. If your 2026 plan assumes you will raise or refinance venture debt in Q3, that assumption just became a risk factor.

Refinancing existing debt gets risky. BDCs and credit vehicles that funded software-heavy portfolios are staring at a maturity wall with billions in debt coming due in a tighter environment. For companies that financed equipment, tooling, or acquisitions with term debt, this is where the squeeze shows up: fewer lenders willing to look at your deal, higher rates on renewal, stricter covenants.

Bank lending turns selective. Even outside private credit, small business lending is showing restraint. Lenders are focused on the safest borrowers. That can sound abstract until you hear: "We would like to see another year of profitability before extending your line."

What to do right now

You cannot control where credit markets go. You can control how exposed you are.

Map your entire debt stack. List every credit facility, term loan, venture debt tranche, and equipment lease with current balance, rate, covenants, and maturity date. Anything that matures or re-prices before the end of 2027 needs active management now.

Run a no-new-money scenario. Build a 24-month model that assumes no new equity, no new debt, and existing facilities renewed only at current terms or not at all. Overlay a 10-15% revenue dip in the back half of 2026 and a 1-2 point increase in interest expense on variable-rate debt. If that scenario breaks your runway or covenant compliance, you have a gap to close now.

Secure optionality while your numbers still look fine. You raise or secure credit when you can, not when you must. Defaults are still relatively low. This is the moment to increase or extend existing lines, lock in term financing for known capital needs, and explore non-bank options before both channels tighten further. You do not have to draw the funds. You want the option.

Positioning, not panic

The businesses that come out of 2026 stronger will be the ones that understood early: the second phase of the SaaSpocalypse is not about stock tickers. It is about the cost and availability of money, all the way down to the $5M ARR company with a single line of credit and one piece of venture debt.

If you want to know how exposed your current capital stack is, that is a conversation worth having now. Book a strategy call.