How Covid Is Changing Small-Business Lending - National Business Capital


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How Covid Is Changing Small-Business Lending

3 min read. November, 2021 – by Jacinta Sherris

The worst of the Covid-19 pandemic is subsiding. As the economy recovers and businesses begin strategizing their next phases of growth, many are noticing a new set of challenges. 

For starters, pent up consumer demand is driving up prices and inflationary levels. It’s also becoming harder to find and attract qualified employees. And even though interest rates hover near zero and the Federal Reserve has agreed to hold off on hikes until 2022  - it hasn’t been any easier for small businesses to secure financing. 

Many lenders, especially banks, have become even more risk-averse during the pandemic. They’re pivoting away from businesses with shorter histories and unstable revenue fluctuations. Some have curtailed lending exclusively to businesses that meet their strict requirements or those with an ongoing relationship going back several years. 

Nowadays, small businesses are finding it difficult to secure financing - some would argue even more so compared to pre-pandemic days. 

Requirements for Small Business Lending

At the very minimum, here is what most banks want to see from small businesses in exchange for financing. 

  • Business credit score and personal credit score of at least 700 or more
  • At least 3 years of business history 
  • At least 2 years of strong revenue
  • Collateral or a personal guarantee
  • Strong industry growth potential 

Why Small Business Lending is Becoming More Difficult 

Banks have always been known to impose tough requirements for small business lending. However, the Covid-19 pandemic has made it more difficult for firms to meet these qualifications. 

For example, many small businesses experienced revenue disruptions throughout 2020 due to lockdowns and other Covid-19 restrictions. Even though operations may have recovered, or even surpassed 2019 levels, lenders aren’t budging. Businesses that fail to show consistent revenue for the past 2 years are being denied nonetheless. 

Another factor keeping many entrepreneurs from obtaining financing is history. For banks, the longer you’ve been in business the safer you seem as a borrower. Most banks won’t even consider your business without a minimum of 3 years of history. Unfortunately, these practices have excluded a majority of early-stage startups from financing. 

Borrowers are also being denied due to low credit scores and a lack of collateral. Banks want to minimize their risks at all costs, which is why most impose strong credit score requirements and want to see collateral or other personal guarantees. 

The unfortunate reality is that banks aren’t making any exceptions. Early-stage startups, borrowers with low credit, lack of collateral, as well as businesses hit during the Covid-19 pandemic have been largely shut out from financing. 

How to Get Small Business Lending in a Post-Pandemic Environment 

Being unable to secure small business financing could hurt your opportunities for growth. In the worst case scenario, lack of capital can disrupt your day to day operations and even hinder your ability to generate a profit. 

Getting small business lending from a bank is increasingly difficult, however, you do have other options. 

Small Business Administration (SBA) loans

The SBA offers plenty of resources for small businesses as well as funding opportunities. SBA loans feature low-interest rates, long repayment terms, and high funding amounts. However, in some cases they can be just as difficult to obtain as traditional bank loans. Fortunately, the SBA has launched a pilot program, Community Advantage Loans, ideal for new and existing businesses that need up to $250,000 in financing.  


Crowdfunding is essentially raising small amounts of funds from numerous investors to create a larger pool of capital. Crowdfunding sites like Kickstarter and SeedInvest have streamlined the process to allow businesses to launch crowdfunding campaigns and raise capital with ease. The downside is that investors typically receive company stock or equity in exchange - which can jeopardize your ownership in your business.

Online lenders

Online lenders are a popular alternative to banks for business lending because they work fast, offer a wide range of products, and most importantly - maintain flexible requirements. Online lenders are more willing to approve financing for newer businesses as well as businesses with lower credit scores. Many businesses also opt for online lenders when they need funding fast - and don’t have weeks or months to wait for a bank loan. 

Explore Small Business Lending Solutions

If you’re considering small business lending solutions but don’t know where to start, make sure to connect with National Business Capital. National is a marketplace that matches small businesses with over 75 different online lenders. 

You could access all the same lending solutions offered by traditional banks and more - including term loans, lines of credit, invoice financing, equipment financing, among others

National works with lenders that consider all aspects of your business’s potential - not just your credit score or lack of history. Our Business Financing Advisors help you find solutions based on your unique criteria and you’ll be able to compare and contrast different offers to select the best one. The best part? National’s approval process is fast - in as little as 24 hours. 

Fill out our 60-second application to learn more about personalized financing solutions. 

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Last Updated on November 19, 2021

National Business Capital helps entrepreneurs secure quick and fair financing to save time and cultivate sustainable growth.

Our stress-free online platform is designed for simplicity and speed, helping business owners go from application to approval in a matter of hours. And while we remain a leader in the Fintech industry, our clients agree it’s our personalized service and award-winning team that sets us apart.

From SBA loans to lines of credit, to equipment financing, and more, business owners can access all the different financing programs available to them in one place. Through our streamlined process, we have helped clients secure $2 billion in financing since 2007, and, more importantly, we’ve helped entrepreneurs save a tremendous amount of time and grow faster.

About the Author, Jacinta Sherris

Jacinta Sherris is an NYC-based writer and content creator. She holds a BS in Economics from New York University and frequently contributes on a wide range of topics, including finance, entrepreneurship, and small business trends.

Disclaimer: The information and insights in this article are provided for informational purposes only, and do not constitute financial, legal, tax, business or personal advice from National Business Capital and the author. Do not rely on this information as advice and please consult with your financial advisor, accountant and/or attorney before making any decisions. If you rely solely on this information it is at your own risk. The information is true and accurate to the best of our knowledge, but there may be errors, omissions, or mistakes.