Square Capital Made More Loans, Maintained Default Percentage, Continued to Show Why They’re A Tough Competitor in Fintech Loan Market

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Square has continued to set itself apart in the fintech lending space. The company announced Wednesday that Square Capital had facilitated 40,000 business loans for a total of $248 million in the fourth quarter of 2016. And they did that while holding their default rate at 4%.

A look at their recent loan volume compared to their competitor OnDeck:


2016 Square OnDeck
Q1 $153,000,000 $570,000,000
Q2 $189,000,000 $590,000,000
Q3 $208,000,000 $613,000,000
Q4 $248,000,000 $632,000,000

Square Capital’s biggest competitive advantage is that they have practically no acquisition cost for their borrowers. “We’re able to upsell and cross-sell to our base of millions of sellers with minimal incremental cost,” Square’s Q4 earnings presentation says. Their payment’s customers, which they can convert to borrowers, processed around $50 billion in transactions last year.

Square had a net loss of $171.6 million across 2016 however, the bulk of which originated in the first quarter. The net loss for Q4 was only $15 million.

Last modified: February 22, 2017

Category: Business Lending, Industry News

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