The larger banks approved just 14.2% of applications in February, down from 28.3% in February 2020. Small banks granted about 20% of loan applications this February, but they were approving about half of all requests back in early 2020, before the pandemic hit.
Companies that have existing lines of credit are seeing interest rates increase. James Carron, who operates Flatirons Pharmaceuticals, in Longmont, Colorado, has seen rates increase for his line of credit that’s about $150,000. Before the pandemic, the rate was 6.99%, but that went up to 10%. Now it’s 13% and rapidly approaching 14%. Other potential lenders he contacted had even higher rates.
“We can’t issue corporate bonds or have other money available to us,” he said. “Large corporations have multiple avenues for them to secure reasonable rates for funding. A small business owner doesn’t have that ability.”