Square Financial Services, the de novo industrial bank established by payment services firm Square, has received conditional approval from the Federal Deposit Insurance Corporation (FDIC) for its deposit insurance application.
The approval gives Square permission to introduce banking services, which it’s reportedly planning to launch in 2021.
As noted in a press release by the FDIC, the new bank will offer commercial loans to vendors who use Square’s payment platform to settle card transactions. Users’ loan applications will be assessed based on their financial history, their management system, their risk tolerance, the requirements of their clients, and their alignment with the objectives of the Federal Deposit Insurance Act.
Following the announcement, Jack Dorsey, CEO at Twitter and Square, tweeted: “Thank you!”
Thank you! https://t.co/mM0z4snQGW
— jack 🌍🌏🌎 (@jack) March 18, 2020
Square’s management confirmed that it has received charter approval from the Utah Department of Financial Institutions.
The firm added:
“The bank, Square Financial Services, is expected to launch in 2021. It will operate independently, as a direct subsidiary of Square, Inc. Its primary purpose will be to offer small business loans for Square Capital’s commercial lending business, and to offer deposit products.”
Square’s management said they will be refunding clients for all software subscription fees for this month, in order to help sellers cope with their cash flow issues. The company noted that the refund policy will apply to Square appointments, retail, restaurants, loyalty, team management, payroll, marketing, and the company’s e-commerce store.
Dorsey acknowledged that “one of the biggest problems sellers have right now is cash flow.”
“We’re working hard on short and long-term solutions. Here’s a start, more to come.”