First and foremost, the credit freeze is at the bank-to-bank level. You may think this is very odd (I know I'm still wrapping my head around it), but a lot of our economy is based on banks lending money to other banks! There's a constant swirl of loans that swirl around the banking industry. Quite a bit of this borrowing appears to be a case of borrwing from Peter to lend to Paul. No, I don't understand this yet, but when I do, I'll explain it!
At any rate, generally, the interest rate at which banks lend to each other is fixed by the Federal Reserve. When they talk about the Fed cutting or raising rates, this is often the rate they're talking about.
The current rate is 2%, but banks are ignoring that. They're demanding at least 4% from each other. So in other words, the credit is available, but it's expensive.
This means that banks are either balking at taking out such loans from one another, or passing the pain on to the people they, in turn, are lending to. So, for example, a business that should have been able to get a decent construction loan at (to pull a number out of thin air) 7% now will have to pay 9%.
This, in turn, may be more than that business (or individual, for that matter) feels they can pay. The rate of interest figures heavily into many borrowing decisions. Consider how many people started to buy homes as mortgage rates started to fall below 7%% a little over a decade ago (speaking as someone who bought into that wave).
So: it's not so much that nobody's lending. It's that nobody's lending cheaply, and many people who rely on credit as part of their capital model are finding the extra cost of borrowing too high.