The planned unit would offer loans and deposit accounts to small businesses and be capitalized with $56 million in cash
The San Francisco-based finance firm led by Jack Dorsey plans to submit an application on Thursday to form a wholly owned bank based in Utah, the company said. The unit, to be called Square Financial Services Inc. would offer loans and deposit accounts to small businesses and be capitalized with $56 million in cash.
Square would be the third financial-technology company that is opting to pursue a banking license in recent months. In doing so, it follows in the footsteps of online lender Social Finance Inc. and mobile-banking startup Varo Money Inc. Square’s application comes at a time when federal regulators are giving their blessing to the most new banks since the financial crisis.
Square had been offering small-business loans and cash advances through its lending arm, Square Capital, since 2014 through a deal it had with Celtic Bank, another Utah-based lender. To date, the company says it has extended more than $1.8 billion in credit to more than 141,000 firms.
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