NEW YORK — Small businesses have the pandemic and now high inflation to grapple with — and they’re finding it’s tough to get a loan to help with the daily grind.

A recently released survey from the Federal Reserve shows how the pandemic has altered the financial landscape for small business. About 85% experienced financial difficulties in 2021, up nearly 20 percentage points from 2019. Back then, more than half of owners who sought a loan were looking to expand; last year, the majority of applicants needed funds just to cover every day operating expenses.

Meanwhile, inflation is the highest in decades, with raw materials and finished goods soaring in price and workers demanding higher wages. The Federal Reserve is raising interest rates in response, which means the cost of borrowing money is going up.

Even in normal times, it can be tough for small businesses to get loans from traditional banks because they lack the assets and credit histories of bigger companies. During the pandemic, banks have been stingier, outside of COVID-related programs. Two years in, loan applicants are more likely to get turned down or to receive less money than they asked for compared to before COVID-19.

When the building she leased in went up for sale, Letha Pugh knew she would need to relocate her business. So, she decided to buy and renovate her own building.

Pugh, co-founder of Bake Me Happy, a gluten-free bakery in Columbus, Ohio, applied for a Small Business Administration loan last July. But the process, involving a Community Development Financial Institution and a local bank, First Merchants Bank, dragged on.

Pugh worried that another buyer would swoop in with cash and buy the building she was under contract for. Finally, in January, she got approval for a loan of $780,000.

While Pugh is glad everything worked out, the episode shows how difficult and stressful it can be for a small business to get financing.

“One night I got off the phone and just started bawling because I was so frustrated, all of these things were happening, not because of me, but because of the bureaucracy and red tape,” she said.

Only about 30% of businesses that applied for financing last year got the full amount that they asked for, down from about half in 2019. Firms owned by people of color, firms with fewer employees, and leisure and hospitality firms were least likely to receive the full amount of financing sought. About 68% of applicants got some of the amount they applied for, down from 83% in 2019 and 76% in 2020.

Todd McCracken, president of the National Small Business Association, an advocacy group, said the current loan environment could make it tougher on small businesses trying to recover from the pandemic. Their balance sheets, which banks look at to assess loan applications, were weakened during the pandemic, even if their prospects are bright.

“Past performance is not really good indicator of future potential,” he said.

In February, big banks approved 14.7% of loan requests, down from 28.3% in February 2020. And small banks approved 20.5% of loan requests, down from 50.3% in the same month in 2020. That’s according to the online lender Biz2Credit, based on data from more than 1,000 small business owners who applied for funding on the company’s platform.

The banks’ stinginess has led business owners to consider other options such as community banks, online lenders and crowdfunding sites. Owners were more likely to apply for an online loan last year than in 2020, while applicants were less likely to seek financing from a small bank, the Fed survey shows.

There are tradeoffs however: Alternative loans can be easier to get but are likely come with higher interest rates or steep penalties. Typically, traditional banks’ small business loans carry interest rates from 3% to 7%, while online loan rates vary widely but can be 10% and higher.

“The good news is, small businesses do have plenty of options out there, although they may not be the cheapest options,” said Matt Schulz, chief credit analyst at online lending marketplace LendingTree.

Business at Cache, a Sandy, Utah-based company that sells truck accessories, boomed during the pandemic. But that unexpected success left the company in a financial bind.

Co-founder Tyler Green realized that the company needed to ramp up manufacturing. Meanwhile, shipping costs jumped from $2,500 per shipping container to $26,000.

Green and his business partner went to their bank seeking a loan of $50,000 to $100,000 but were told they didn’t qualify for a loan that big. Another problem: As a new business that was making money, Cache didn’t qualify for pandemic aid either. And being a manufacturer, the company needed funds in a hurry.

So, the owners turned to Quickbooks’ lending arm, QB Capital. They got a loan in three days. It’s $15,000 with an interest rate of 10%. That doesn’t cover everything, but is essential for keeping the business going in the short-term.

“It really is something that genuinely saved our business,” Green said.

Crowdsourced loans are another option for small businesses.

Since founding Hugo Coffee Roasters in Park City, Utah, in 2015, Claudia McMullin hasn’t been able to convince a traditional bank to give her a loan. She said she lacked the historic cash flow that banks like to see.

“Small businesses are stuck in this twilight zone between we need capital to grow, but we can’t get capital to grow because we don’t qualify because we haven’t grown yet,” McMullin said.

She has used her own money and borrowed from friends and family to help fund the business. Then last year she got a large purchase order from a grocery store chain for beans that she didn’t have enough money on hand to pay for.

McMullin took out a loan with an online lender, which she called “a lifesaver at the time.” But the terms were strict with payments due weekly, and she’s had trouble paying it off.

“It only works if you get in and out quickly,” she said. “Now, it feels like it’s killing me and killing my cash flow.”

She turned to Kiva, which offers crowdsourced loans at low interest rates, to restructure her debt. McMullin’s $25,000 loan has 0% interest with an 18-month payoff period. Kiva says it will work with borrowers that can’t repay a loan in the allotted time, although a default makes them ineligible for additional loans.

Online lenders aren’t the only option to traditional banks. For Suzan Hernandez, finding support from community organizations has been key to helping her navigate the loan process.

Hernandez founded MamaP, which sells personal care products that cut down on plastic like bamboo toothbrushes and laundry detergent sheets, in 2019. She found a mentor via the JP Morgan Chase Minority Business Program, and the mentor advised her to join groups like the New Jersey Hispanic Chamber of Commerce and the New Jersey Small Business Development Corp. for support.

She’s looking for a $500,000 loan or line of credit. She has been applying to different loans from community lenders and SBA-backed banks for about eight weeks. Although it’s time-consuming, she said the process is worth it because of the low rates offered — interest rates vary from 3 to 6%.

“Right now, working with representatives to understand what we qualify for and what is required, it’s a lot of paperwork,” but worth it, she said. “It has been good. Because these aren’t a straight loan from a conventional bank, they’ve been more supportive.”