From Fortune Media IP Limited:

Small business owners have alternative options to attract capital in the form of private credit from non-bank institutions. This industry has grown to $1 trillion in assets and is a key resource for small businesses to access long-term financial stability and grow operations.

Private credit is not a new concept but has increasingly been utilized by small and medium-sized businesses for decades. Not only does this provide additional funding beyond what big banks can offer, but it also connects businesses with expert guidance and a network of support for scaling and managing challenges.

The private credit sector has had a positive impact on the economy, creating 1.6 million jobs and generating billions for the GDP. Unsurprisingly, the booming industry is prompting calls for regulations. Critics want to impose bank-like regulations on private lenders, but this approach fails to recognize the distinct differences between the two types of financing.

Despite calls for stricter regulation, the Federal Reserve’s Financial Stability Report concludes that private credit funds pose limited risks. Both private equity and credit firms are properly regulated by the U.S. Securities and Exchange Commission to ensure compliance and reporting to the government.

Amidst changes happening in the financial sector, private credit has provided a cornerstone for the financial stability of small businesses and the American economy. This capital flow from investors to businesses fuels growth and innovation, which is critical to America’s prosperity and success.

Private credit is a critical resource for American small businesses. They deserve more access to capital, and policymakers should endorse the financial stability it provides rather than impose unnecessary regulations and barriers. The banking system still continues to provide loans, while private credit fills the gap for businesses that don’t meet traditional bank loan criteria.

This article was published by Drew Maloney, president and CEO of the American Investment Council, an organization supporting the private investment industry’s contributions to the U.S. economy. Subscribe to Fortune’s daily newsletter for more financial news and analyses.



Read more: Small businesses are turning to private credit–but overregulation threatens to cut off that lifeline