Block, Inc. announced its industrial bank, Square Financial Services, Inc. (SFS), has received approval from the Federal Deposit Insurance Corporation (FDIC) to begin offering the consumer loan product Cash App Borrow. SFS is an independently governed subsidiary of Block, Inc., headquartered in Salt Lake City, Utah.
The expansion of Square Financial Services, Inc. to offer small, easy-to-repay consumer loans to Cash App customers will continue to drive economic empowerment to consumers. Cash App Borrow is designed to provide short-term cash flow in a simple and accessible way when alternatives are notoriously expensive and difficult for consumers to navigate.
The average Cash App Borrow loan was less than $100 and approximately one month in duration, at a fraction of the cost of a payday loan or overdraft fee – and smaller and shorter-term than what a typical bank offers.1,2 The short-term credit product is available to eligible consumers who utilize Cash App, and has seen strong product market fit with nearly $9 billion in originations in 2024 offered by Block, Inc. through an external bank partner.
Additionally, the vast majority of Borrow revenue comes from customers who pay on time, as the product maintains historic loss rates of less than 3%. Customer eligibility and maximum Borrow offers are based on a number of factors, including customers’ state of residence, Cash App product usage and activity, and on-time repayment history.
“Across Block we’re focused on building technology to increase access to the economy, and Square Financial Services is a critical tool in helping us deliver on that,” said Amrita Ahuja, Block’s COO & CFO, and Executive Chairwoman of the Board of Directors for SFS. „The bank allows us to provide a clear path to cash flow using our proven underwriting mechanisms for businesses and now, consumers who are not well served by the traditional banking and credit systems. We thank the FDIC for enabling us to reach this milestone.”
Square Financial Services, Inc. currently offers business loans and interest bearing business savings accounts to businesses through Square Loans and Square Savings. The average Square Loan is approximately $10,000,3 a small fraction compared to the average business loan, providing Square sellers with transparently priced financing options uniquely tailored to their business that are repaid through a fixed percentage of their daily sales. Square Savings uses automation to simplify sellers’ ability to budget, organize, and save their money for specific goals and priorities. As of December 31, 2024, savings balances through SFS totaled more than $300M.
At the time of the Cash App Borrow servicing change, there will be no impact on the terms of outstanding loans, including payment schedule, and customers will continue to make payments within Cash App. SFS will begin servicing and originating Cash App Borrow loans in the coming weeks with a gradual, disciplined approach to ramping volumes over the course of the coming quarters.
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1. As of December 31, 2024.
2. We are able to offer Cash App Borrow at a cost that is less than 1/6th the cost of a payday loan (which averages a 391% APR according to the St. Louis Fed). According to the CFPB the median overdraft on a debit purchase ($24, paid back in 3 days, $34 fee) is a 17,000% APR.
3. According to the Small Business Administration, the average 7(a) business loan was about $436,000.
DISCLOSURES
Square Savings accounts are provided by Square Financial Services, Inc. Member FDIC.
Cash App is a financial services platform, not a bank.
Block, Inc. builds technology to increase access to the global economy. Each of Block brands unlocks different aspects of the economy for more people. Square makes commerce and financial services accessible to sellers. Cash App is the easy way to spend, send, and store money. Afterpay is transforming the way customers manage their spending over time. TIDAL is a music platform that empowers artists to thrive as entrepreneurs. Bitkey is a simple self-custody wallet built for bitcoin. Proto is a suite of bitcoin mining products and services. Together, we’re helping build a financial system that is open to everyone.
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