The approval percentage for small business loan applications at banks with $10 billion or more in assets plummeted to 15.4% in March, falling from a post-recession high of 28.3% in February 2020, according to the Biz2Credit Small Business Lending Index.

“This is a stunning fall that was not entirely unexpected,” Rohit Arora, CEO of Biz2Credit, said. “Until just a few weeks ago, the economy was very strong, and big banks were lending at unprecedented frequency. Now, obviously, things have changed.”

The approval rate at small banks fell from 50.3% in February to 38.9% in March.

“Smaller banks have been a good source of business financing for a long time. While they are no longer approving more than they decline, business owners are reaching out to them because they are likely to provide funding through SBA loans,” Arora said. “As the economic crisis related to coronavirus continues, I believe smaller banks will lead the charge in helping companies get back on their feet. We have already seen that since community banks made such a strong showing on the first day of the CARES Act PPP lending program, while some big banks weren’t ready and have already reached their self-imposed lending limit.”

Institutional lenders’ approval percentages fell from 66.5% in February to 41.2% in March.

“Institutional lenders carved out significant strength in the small business lending marketplace over the past few years, but they are not immune to this market shock,” Arora said.

Small business loan approval rates among alternative lenders fell from 55.9% in February to just 30.4% in March.

“Alternative lenders offer quick cash, so they will play a role in providing money to struggling companies,” Arora said. “But those who can wait for government-backed loans will do so because the interest rate under the PPP lending program is so low at 1%. Honestly, rates cannot go much lower than that, and some of the loans will be forgiven if businesses retain their workforces at pre-coronavirus levels.”

The approval percentage rate for credit unions dropped from what was already a record low of 39.6% in February to 23.2% in March.

“Credit unions had challenges in the business lending marketplace before the coronavirus came along,” Arora said. “With the speed that is required to pump some life into businesses right now, credit unions won’t be in the forefront of lenders. The credit unions that have improved their digital capabilities or partnered with fintech firms are well ahead of competitors, especially now.”

The Biz2Credit Small Business Lending Index is an analysis of loan requests from companies in business more than two years with credit scores above 680. The results are based on primary data submitted by more than 1,000 small business owners who applied for funding on Biz2Credit’s platform.

Founded in 2007, Biz2Credit has arranged more than $3 billion in small business financing.