If small businesses are the motor of the economy, small banks and credit unions are providing much of the gas.

In March, small bank lending to small businesses went up, as loans from big banks and alternative lenders dipped, according to the latest report by Biz2Credit, an online loan marketplace.

This is good news for entrepreneurs still trying to dig out from the recession, or looking for cash to grow that doesn't come with the higher interest rates charged by alternative lenders.

A look at the numbers shows that small bank loan approval rates rose to 51.6 percent, compared to 51.4 percent in February. (Similarly, credit union approval increased to 43.6 percent compared to 43.4 percent in February.) Meanwhile, big bank approvals dipped to 18.8 percent, compared to 19.1 percent in February.

"This is the first month since the October government shutdown that big bank approval rates have dropped," says Rohit Arora, chief executive of Biz2Credit.

The reasons for the big bank pullback, Arora says, are three-fold. First, big banks have more challenging underwriting standards and they may be waiting for 2013 tax returns from businesses. The harsh winter has also wrought havoc on business sales as customers stayed home and businesses themselves pulled in and perhaps sought fewer loans. Lastly, Arora says, banks haven't done a good job automating their loan processes, so it slows down their loan approvals.

In the past few years, smaller banks have responded to regulators and altered their small business lending strategies, bolstering their commercial and industrial loans, and turning away from more speculative commercial real estate loans. They've also benefitted from the Small Business Administration's Advantage loans of up to $350,000, the guaranteed portion of which they can easily sell on the secondary market, Arora says. Big banks, by contrast, are less interested in these smaller loans.

Alternative lending also fell, to 63.6 percent compared to 63.9 percent in February. In December of 2013, alternative lending approvals were as high as 67.3 percent, Biz2Credit reports.

Alternative lenders, which usually charge much higher rates for their loans and take daily debits from small business accounts, came into their own during the worst years of the recession when banks generally stopped extending credit.

But as economic conditions have improved, so have the fundamentals of small businesses, and that makes it more of a buyer's market.

"Alternative lending has really boomed and they’ve used the online space really well as more customers have migrated online," Arora says. "But the underlying cash flow of businesses is improving and they are less desperate to borrow at any cost.'