Mobile payments processor Square is filing an application to create an industrial loan company with the Federal Insurance Corporation.
The move, which will reportedly take place today, will allow Square to own and operate an industrial bank without being subject to regulatory requirements of a bank holding company. Most notably, as an industrial bank, Square will be able to hold deposits on its own, creating a potentially low-cost funding source, as well as allowing for a wider range of financial products.
The bank, which will be called Square Financial Services Inc., according to The Wall Street Journal, will be headed by former Green Dot CEO Lewis Goodwin and chaired by Jacqueline Reses, who currently fills that role for Square’s lending arm, Square Capital.
The new Square bank will also offer loans to small businesses, but will be able to do so without a needing a partner bank to issue the loans. Square Capital, which is currently partnered with Celtic Bank for credit issuance, has currently lent almost $2 billion in loans to over 140,000 SMBs since its launch in 2014.2 - Readers Like This Post