From what I understand, this is actually highly debated among biblical scholars.
This idea that he meant "it's hard but not impossible" seems to generally be pushed by wealthy religions and "prosperity gospel" types.
Reading everything else Jesus said, I find it more likely that he literally meant the "eye of an actual needle". He did not seem to be a fan of the rich or powerful in any way.
It's not impossible for a rich person to develop spiritually and attain heaven. They just have to give up all their riches. So functionally it is easier for a camel to do this other equivalent nearly-impossible thing.
In a Catholic and the way those verses are interpreted is that it’s not that you have to give up all your money but give up greed, it basically means that you should not worship your wealth but place your highest of high towards God, then and only then you can use your wealth towards the Good as you have no more attachments.
I think Protestant have similar interpretations but I could be wrong as they have many denominations.
To be fair, needles at the time probably weren't as fine as they are these days, so you may still have a gap a millimeter across instead of a fraction of that.
This idea that he meant "it's hard but not impossible" seems to generally be pushed by wealthy religions and "prosperity gospel" types.
Reading everything else Jesus said, I find it more likely that he literally meant the "eye of an actual needle". He did not seem to be a fan of the rich or powerful in any way.