While a post-COVID world may still seem a ways away, there’s no question we’re inching closer. Three approved, deployed vaccines are slowly but steadily making their way across the country, and as warmer temperatures approach, many small businesses are bracing themselves for pent-up demand. Whether these businesses are in travel, beauty, fashion, hospitality, or any other consumer-driven industry, one thing is for sure: people will be ready to spend.
Certain consumer demographics are primed for springtime spending because they’ve played a part in one (somewhat unexpected) coronavirus-spurred economic trend: Amid widespread economic decline and financial instability, some consumers have been saving more than ever before.
According to the U.S. Bureau of Economic Analysis, in April 2020, the U.S. personal saving rate—the percentage of people’s income remaining each month after taxes and spending—skyrocketed to a record 32.2%, up from 12.7% in March. At the same time, consumer spending fell 12.6%.
To put this shift in perspective, over the past 10 years the personal saving rate has hovered in the 6-8% range. But after April’s all-time high, it settled steadily into the teens—ranging from roughly 13% to 15% over the last four months of 2020.
So, what’s the point?
If consumerism has taught us anything, it’s that Americans don’t save forever. All signs point to a need for small businesses—particularly B2C small businesses—to ramp up inventory, hiring, and other business operations in anticipation of a post-COVID spending surge. This means one thing for your lending institution: small businesses will boom—but they’ll need capital in order to be ready.
Are you ready to capitalize on the opportunity?
As small businesses prepare to meet pent-up demand and maximize revenue after a particularly turbulent year, you’ll need to do the same. And there’s only one way you can prime your institution for the most profitable small business lending operations possible: by turning to digital.
By and large, small business owners who’ve historically relied on in-person transactions to secure capital have since been spoiled with online lending services. In lockdown, they’ve had no other choice. In order to meet growing demand with the most success, you’ll need to lend to small business owners the way that they want you to—and they want it digitally.
Adopting a digital end-to-end small business lending solution can elevate your profitability, client portfolio, and lending volume in three critical ways:
- Increase efficiency: Digital loan origination and communication channels can streamline the manual, mundane, and ever-tedious processes that drain your institution’s time and money. By centralizing your small business lending operations on a single, integrated platform that allows for end-to-end automation, small business loans can take a fraction of the time they did before—enabling your employees to focus on higher-value tasks while still increasing your total lending volume.
- Reduce risk: With a digital solution that enables automatic visibility into real-time credit indicators—from day-to-day (or even hour-to-hour) cash flow to daily ACH payments—you can keep a pulse on your small business clients with ease. Ensure they’re delivering ROI without putting your business at risk, and focus your efforts on the short-term while economic conditions continue to shift.
- Maximize returns: By automating manual tasks, an end-to-end digital solution can dramatically reduce the cost of small business lending for your institution. This allows you to fulfill more loans, at a fraction of the cost, with a higher rate of return. It’s an ideal path to profitability, and it’s paved with minimal-effort, low-risk, short-term small business loans. The more capital you can provide to credit-worthy small businesses, the more they can sell to eager-to-spend consumers—and the more it’ll benefit you both at a critical economic turning point.
Meeting pent-up SMB lending demand starts with adopting a digital solution. If you can do that, you’ll do more than just capitalize on the upcoming spending surge—you’ll capitalize on a lending category that’ll breed opportunities well beyond 2021. If you’re looking to get on board with streamlined small business lending, there’s no better time.