Banks with $10 billion or more in assets approved 8.9% of small business loans in April, falling from a mark of 15.4% in March and an all-time high of 28.3% in February, according to the Biz2Credit Small Business Lending Index.

The April 2020 figure was the lowest approval rate for banks with $10 billion or more in assets since the Index began in January 2011. The rates do not reflect PPP loan approval rates because the government makes those approvals rather than the banks themselves.

“The decline was wholly expected but still startling,” Rohit Arora, CEO of Biz2Credit, said. “Until February, the economy was as strong as we had ever seen, and big banks were lending at unprecedented frequency. Now, unemployment is at Depression era-levels. The rapidity of this change is still hard to comprehend even two months later.”

Small banks, or those with less than $10 billion in assets, approved 11.8% of small business loans in April, down from 38.9% in March and 50.3% in February.

“Smaller banks have been overwhelmed by a flood of PPP loan requests, but they have still had some non-PPP applications. The approvals for these loan applications are strikingly low,” Arora said. “Regional and community banks are being asked to play a large role in the recovery of small businesses. We can expect this to continue, particularly since the PPP loans come with government backing.”

Institutional lenders’ approved 18.1% of small business loans in April, down from 41.2% in March and a record high of 66.5% in February.

“Institutional lenders may be shying away from lending to small businesses at the moment. They became important players in the small business lending marketplace because of relatively high yields and low default rates. Unfortunately, this is not the case right now,” Arora said. “Looking long term, I do expect them to regain their strength and become important players again.”

Alternative lenders approved 15.2% of small business loans in April, down from 30.4% in March and 55.9% in February.

“Because PPP loans come at just a 1% interest rate and, in many cases, will be forgivable, companies looked for other options besides funding from alternative lenders,” Arora said. “However, because of the speed at which they can make decisions and put money into the bank accounts of small businesses, they are likely to be some of the first to return to high levels of funding as the crisis eases. They may not again reach pre-coronavirus levels, but there will still be a place for them in the small business lending marketplace.”

Credit unions approved 18.1% of funding requests in April, setting a record low for the third-straight month. Credit unions approved 23.2% of requests in March and 39.6% in February.

“Credit unions struggled in the business lending marketplace for quite some time even before the coronavirus came along,” Arora said. “Many of them were shut out in the first round of PPP funding, and thus the businesses that applied with them for loans did not stand much of a chance. The Treasury Department and SBA made some changes, so the figure may rise next month. Credit unions that have their own digital loan application systems or that partnered with fintech firms to enable online applications now have a big leg up on the competition.

“These economic figures underscore the importance of getting capital into the hands of small business owners quickly. There is limited time left to act to save America’s small businesses for the foreseeable future.”

Biz2Credit has arranged more than $3 billion in small business financing since it was founded in 2007.