Square is looking to form an industrial bank focusing on servicing small business clients offering services such as lending and deposit accounts. The bank, which would be called Square Financial Services Inc, will be located in Utah with a capitalization of $56 million in cash. According to Business Insider Square “already operates a lending division, Square Capital, which has been in operation since 2014 and has made more than $1.8 billion in loans” however the current offerings are conducted through a “partnership with another institution, Utah-based Celtic Bank.”
Square is essentially planning on creating a stand alone corporation in an effort to penetrate a growing small business lending market estimated to be as large as $186 billion. For Square, this is the logical next step for a payment processing company which has seen its “gross payment volume has grown 32% and revenue is up by 26%.”
Between its payment-processing business and the rest of its ecosystem, Square believes there’s $64 billion in annual U.S. revenue potential, and six to seven times this amount when international market opportunities are included.
As a small business owner this is great news. I currently use the Square payment processing app for smaller invoices from customers and I can attest to the ease of use of their product. If their new bank offers similar efficiency in small business lending I will be one of the first to sign up for and promote the product.