Square's made $1 billion in business loans, surprising even its own executives

Square has doled out $1 billion in loans to businesses through its Square Capital program.

Square has doled out $1 billion in loans to businesses through its Square Capital program.

San Francisco-based payment company Square has doled out $1 billion in loans to businesses through its Square Capital program, it revealed in its earnings report this week.

That amount surprised even Square's executives, VentureBeat reports, because it only rolled out the lending program two years ago and does not typically disclose how many businesses are using the program. What's more, many businesses are coming back for multiple rounds of funding, Square said.

“It’s something we didn’t foresee when we started,” Chief Financial Officer Sarah Friar said on the earnings call. Square is also on track to provide more funding for businesses in 2016 than it did the year prior, as the program increases in popularity.

The difficulty of getting funding to expand operations is a chronic problem for small businesses, but they've found a lifeline in this sort of lending by Square and PayPal, which has a similar program, VentureBeat reports.

“Square can provide capital in time of need — that’s a lifesaver and you don’t forget it. You stay loyal,” Tod Wilson, owner of Mr. Tod’s Pie Factory, told the site.

Square has been branching out into ways to diversify its core product offering and find new growth opportunities. In March, Square said it would now offer loans through partner Celtic Bank to the small businesses that use its card reader.

"We are now transitioning from a merchant cash advance to a flexible loan product to help us expand the program and further empower you to reach your goals," the company said in a statement sent to the Business Times.

Both moves are part of an effort by Square to remain competitive in an increasingly crowded fintech space, which has been hampered recently by a chilling of the credit markets.

Riley McDermid, "Square's made $1 billion in business loans, surprising even its own executives" BizJournals.com, November 2 2016. Accessed via: http://www.bizjournals.com/sanfrancisco/news/2016/11/02/square-business-loans.html

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