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