Square Inc SQ has introduced Square Banking, a suite of financial products designed for small business owners.
What Happened: The new suite consists of three components: the new deposit account products Square Savings and Square Checking, and the company’s lending vehicle, formerly known as Square Capital and now being called Square Loans.
According to the company, Square Savings offers an automated process for setting aside funds in FDIC-insured accounts offering a 0.5% annual percentage yield. Square Checking complements the Square Debit Card and does not come with account minimums, overdraft fees, or recurring fees; customers can move funds between the savings and checking accounts.
Christina Riechers, Square Banking’s head of product, said the company has introduced “fair, accessible financial services that connect directly with our sellers’ payments, helping them unlock instant access to their sales, automate their savings, and receive personalized financing offerings.”
Why It's Important: Square’s expansion in small business banking comes at a time when both money center and community banks are slowly ratcheting up their small business lending.
According to the Biz2Credit Small Business Lending Index released last week, small business loan approval percentages at the nation’s largest banks — those with $10 billion and more in assets — saw an uptick from 13.5% in May to 13.6% in June 2021, while smaller banks’ approvals rose from 18.7% in May to 18.9%.
“Banks are looking to increase their SBA 7(a) loan-making, as they found out that the small business lending sector can be lucrative,” said Biz2Credit CEO Rohit Arora. “Smaller banks, especially community and regional institutions are partnering with fintechs to make their small business loan application process digital. The pandemic opened up opportunities for many banks.”
Photo: Arek Socha from Pixabay.
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