Square Capital, a wholly-owned subsidiary of payments company founded and run by Twitter CEO Jack Dorsey, is the latest non-bank institution approved to distribute loans to help small- to medium-sized businesses afloat amid the coronavirus pandemic.
Square Capital joins PayPal and Intuit QuickBooks, who were approved last week by the Small Business Administration to take part in the effort known as the Paycheck Protection Program. The $350 billion-emergency loans are part of the $2 trillion support package, which was passed by the Congress in March to help small businesses survive the economic pain caused by the coronavirus.
For weeks, fintech companies have been lobbying to be included in that stimulus plan.
Square Inc., the parent company, has received a green signal last month to open its own bank in Utah, a few weeks after it secured a conditional approval for banking license provided by the US’s Federal and State banking regulator.
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The banking license was part of the firm’s push to grow into a financial institution that could compete with established lenders.
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The San Francisco-based company had applied with state regulators in Utah and the US Federal Deposit Insurance Corp in September 2017 for a bank charter so that it could offer deposit accounts. The move immediately sparked immense controversy as it marks the first entrance of a cryptocurrency-friendly firm into traditional banking.
Though Square had withdrawn its application to create a deposit-taking bank later in 2018, the payments processor said it intends to apply again in the future.
Earlier in 2018, Square was granted a so-called BitLicense by the New York State Department of Financial Services (NYDFS).
San Francisco-based Square had jumped on the cryptocurrency bandwagon back in January when it rolled out Bitcoin trading to its Cash App customers.
Square founder and CEO Jack Dorsey has repeatedly shared his enthusiasm for digital currencies, saying it provides an “opportunity to get more people [to] access to the financial system.” He also thinks bitcoin is a transformational technology and will be the world’s single currency in 10 years.