Amazon (NASDAQ:AMZN) announced today that it had originated over $3 billion in loans to more than 20,000 small businesses since 2011. One billion of those loans came in the past 12 months. Peyush Nahar, VP for Amazon Marketplace, released a statement on the milestone;

“We created Amazon Lending to make it simple for up-and-coming small businesses to efficiently get a business loan, because we know that an infusion of capital at the right moment can put a small business on the path to even greater success. Small businesses are in our DNA. Amazon is providing capital to small businesses to help them expand inventory and operations at a critical period of their growth. We understand that a small loan can go a long way.”

The Street.com aptly said the Amazon was “has secretly become a giant bank.”

The data points Amazon shared were pretty compelling. 50% of the small businesses that take out a loan come back and do it again. Loans range from as little as $1000 but go up to $750,000. Amazon is now lending in the US, UK and Japan.

But here is the rub. While other online lenders must pay a hefty fee to acquire new borrowers that is not the case for Amazon. The worlds largest retailer already has the relationship with these borrowers. Marketing to these small businesses cost, well, very little.

Will Amazon Become the World’s Largest Online Balance Sheet Lender?

Amazon is not the only internet mega-giant that has realized a digital relationship can be leveraged in many different ways. My guess is that Amazon has been watching Alibaba lead the way in China. While Amazon is only lending to three countries today they currently provide services in 130 different countries. No costly brick and mortar locations necessary.

Caleb Light, Vice President of Sales for Power Practical, in Salt Lake City, Utah, said that Amazon has been a hugely positive impact on their business;

“Traditional funding vehicles wouldn’t support our model of direct to consumer and we needed help. Amazon stepped in and is a great partner for us. The loans from Amazon Lending enabled us to expand inventory and resulted in us having a very strong and successful 2016.”

If this is not a wake up call for the traditional banking model than I don’t know what is. But this should also be a worrisome challenge for some of the pure-play online SME lenders with a higher cost of capital and expensive lead generation operations.

Next up, Apple, Google and Facebook.