According to Biz2Credit‘s latest Small Business Lending Index, small business loan approval percentages at lage banks decreased from 13.3% in October to 13.2% in November. In comparison, big banks approved 28.1% of the funding requests they received last November.

“Even though many companies are operating at a loss right now and need capital, they are discouraged from applying for funding because of the likelihood [of] rejection as approval rates drop and because there is so much economic uncertainty caused by the coronavirus,” Rohit Arora, CEO of Biz2Credit, said. “Business owners are anxiously awaiting the enactment of a second Paycheck Protection Program that would provide forgivable loans to survive the current pandemic surge. Without significant federal assistance, small companies all across the country will struggle. Many of them will not survive.”

The recent U.S. Bureau of Labor Statistics’ jobs report revealed that nonfarm payroll employment rose by 245,000 in November and that the unemployment rate edged downward to 6.7%. These improvements in the labor market reflect the resumption of economic activity that was previously curtailed by the pandemic. Job increases occurred in transportation and warehousing in November as holiday gifts make their way to stores and consumers. Employment also rose in professional and business services and health care.

“A study this week reported that more than 30% of small businesses in New Jersey have closed. This would have seemed inconceivable less than a year ago. My fear is that if a government stimulus package is not enacted, even more businesses will go under,” Arora said. “As the virus seems to be spiking again, local governments may enact tighter restrictions on the operations of restaurants, gyms and other businesses. This would put a great strain on businesses that are already not likely to survive much longer without help.”

In November, small banks approved 18.3% of business financing applications, down one notch from 18.4% in October. Small banks granted more than half (50.5%) of funding requests last November.

“This dramatic drop is attributed to the toll the coronavirus has taken on small businesses and the economy overall,” Arora said.

Similarly, credit unions slipped two-tenths of a percent to a 20.7% approval rate in November from 20.9% in October. In November 2019, they approved almost 40% of the applications they received.

Two categories of lenders rose slightly in November. Institutional lenders approved 22.6% of applications for funding in November, up slightly from 22.5% in October. Meanwhile, loan approval rates among alternative lenders rose slightly from 23.3% in October to 23.4% in November. These figures again shines light on the challenges for small companies in search of capital. Last November, institutional lenders approved nearly two-thirds (66.1%) of their funding requests, and alternative lenders granted 56.3% of their applications.

“Institutional lenders are looking for yields so they are willing to provide funding, as are alternative lenders such as fintech companies. Despite these two small bright spots, companies seeking capital are having a tough time securing it. Business owners are looking to the government for help,” Arora said.