Keep the money flowing. 

As some see it, that was the sole idea behind the Paycheck Protection Program (PPP). Our economy runs on spending, so in the midst of the COVID-19 pandemic and subsequent economic crisis, it made sense: The government would guarantee loans to small businesses, administered by both banks and non-bank lenders, and mandated to predominantly be spent on salaries. 

But it hasn’t been sustainable. Many small business owners have long exhausted their PPP funds, and an alarming number have already shuttered their doors for good. 

All in all, $525B was loaned, with 5 million businesses receiving funding. While those may sound like big numbers, it’s a relatively small percentage of total small businesses that received help. In New York City, for instance, only 12% received funds. Meanwhile, 230,000 local businesses have closed permanently. 

The bottom line? PPP money is running low—and time is running out to fund it. But the problem facing small businesses doesn’t begin and end with the PPP. Congress isn’t going to fund it forever. The pandemic has already outlasted it—and a plethora of problems preceded it.

Accounting for prior crises—and pre-pandemic barriers 

For many, the current crisis has brought to light a reality that has been hiding in the shadows for well over a decade: Our financial system isn’t supporting small businesses well enough—and it hasn’t been for a long time. 

Small businesses make up 99% of all American businesses—and employ nearly half of the American workforce. And yet since the last major crash in 2008, lenders tend to keep them at arm’s length, ensuring their own safety by granting capital to only a select few (many of whom could get by just fine without it)—and making it very difficult for them to get.

This pattern has proliferated in nearly every realm of small business lending. Between manual, labor-intensive processes, endless layers of stakeholders, and outdated legacy technology, small business lending has been largely defined by its lack of efficiency. That is, until the PPP came around. Predominantly digital and substantially more efficient, many small business owners who received PPP loans found themselves asking: Why can’t regular small business lending work like this?

Stephanie Patterson Gilbert, owner of family-run small business in Washington, Georgie Lou’s Retro Candy store, recently summed it up to a CNN reporter, “We are down to our last remaining funds, and we have found most aid programs frustratingly slow, needlessly complicated, and inadequate to actually do much good.” 

In short? Time isn’t just out to re-fund the PPP. Time is also out for the outdated, manual-based processes that aid programs and financial institutions alike use to extend credit to small businesses—if at all. 

Putting the banking industry in perspective 

In the last five months, some of the most antiquated industries have embraced technology out of necessity—but the impact goes well beyond questions of short-term survival. 

Online ordering and curbside pickup are everywhere—from grocery store produce to gas station convenience items to five-star dining experiences. Trade shows and events are using virtual event platforms to engage audiences. The automation trend that was already in full swing has accelerated. Yet banks and non-bank lenders still lag behind.

It’s time for lending institutions to make the transition—and it’s not just “adapt or go under” for your own organization. It’s adapt or go under for the entire small business segment—and your ability to retain them as customers in the next two years, let alone the next 10. 

Because soon (if they haven’t already), small business customers are going to be coming in for more than PPP loans. They’re going to be coming in for a standard credit request from you, their bank. And if you can’t fund it for them in an efficient, effective, and profitable manner, you’ll be at risk of losing your relationship to competitors who have stepped up to the plate and made these sorts of investments. 

Looking ahead to shared long-term survival 

By adopting an end-to-end technology platform lending that allows you to originate, underwrite, and service small business loans, you can solve the profitability problem that has plagued your institution for far too long.

Small businesses need banks to step up and do their part. But that doesn’t have to mean sacrifice. By digitizing your small business lending operations, you can dramatically reduce the cost of extending capital to your small business customers. You can cut out tedious manual processes that hurt both your customers and your bottom line, and you can profit off of digital just like nearly every other industry already has.