I've worked at a lender that did loans to small businesses somewhere in between categories 1 and 2.

The major thing that's changed is the availability of data. A $100k loan used to take several hours of expensive analyst time to process manually, and since most would be rejected, it wouldn't be worth it. Now a business can, e.g., securely share real bank account data.

That makes the whole process much faster, which reduces the cost per loan, which makes smaller loans profitable.

I imagine something similar can apply for small business equity.