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As the COVID-19 pandemic continues to hammer the economy, loans to small businesses hit record lows last month, according to the Biz2Credit Small Business Lending Index.

According to Biz2Credit’s Index released on Tuesday, credit unions approved 18.1% of funding requests in April, down from 39.6% in February. The drops occurred among all lenders, with big banks approving only 8.9% of small business loan applications in April, down from an all-time high of 28.3% in February. That is the lowest rate of approval since the Index, which tracks monthly data, began in 2011.

The data excluded loans from the federal government’s Paycheck Protection Program, part of the Coronavirus Aid, Relief and Economic Security Act, or CARES Act – initially, in March, for $349 billion, with another $310 billion approved by Congress last month. Many credit unions and banks got “log-jammed” with PPP loans, precipitating a drop in the supply for traditional lending to small businesses, such as working capital loans and cash advance programs, Rohit Arora, CEO and co-founder of Biz2Credit, said.

“In April, most of the institutions got busy with PPP programs,” he said. “There was very little lending that has happened, and we’ve seen very dramatic drops.”

And it’s not just the supply side, he said. He said the drop in both supply and demand stands in stark contrast to the 2008 recession.

Demand dropped dramatically as many businesses realized that lockdown orders in several states were unlikely to lift by May 15, as originally planned. By March 20, Arora said, “things quickly collapsed.”

“I can reopen my business, but if I’m dependent on other people using my services and products, if they’re not confident, I really don’t have any demand out there,” he said.

The drops hurt other lenders, as well. Many small banks, overwhelmed with PPP lending, saw their loan approval rate drop to 11.8% in April, compared to 50.3% in February.

Institutional lenders, such as insurance companies, approved 18.1% of applications in April, down from 66.5% in February, while alternative lenders, like hedge funds, saw a drop to 15.2% from 55.9%.

The Index’s data for this month could reflect some changes as many states are reopening certain businesses, Arora said. But it is hard to predict the pandemic’s impact.

“People are nervous about what happens if infections rise again,” he said. “The second thing is, services businesses are still okay, but still very cautious in how much money they want to borrow.”