|03/04/2022||How Square avoided 'death by Amazon'|
|01/31/2022||Square sellers can now offer Afterpay|
|12/16/2021||H&R Block sues Square|
|12/01/2021||Square rebrands to Block|
|11/05/2021||Square Loans originated $594M in Q3|
Ep 38 - Mayor of Miami, Texas Unmasked, Square's a Bank
NYC Fintech Women - Closing Bell - Times Square
deBanked Times Square
deBanked Times Square 2
Potential Match Found in deBanked UCC Filer list
|Company Name||Phone number||UCC Alias 1||Alias 2||Alias 3||Alias 4||Alias 5|
|DB Squared Inc||866-855-3640|
Ronak Daya, who spearheaded several of Square Capital’s lending divisions, including “head of product for business lending” and “head of product for external lending and partnerships,” announced on twitter that he had moved on from the company. He had been involved in SMB lending for 7 straight years. His new role? Head of Financing Products at Coinbase.
If you thought Coinbase was just about buying Bitcoin, you’re wrong. Daya announced that he’ll be leading a team “to build lending and financing products both for consumers and institutional clients.”
“As I explored what came after Square, my primary focus was on challenging myself to go in a fundamentally new domain/area, and build for a new customer,” Daya wrote. “The priority was learning. Learning by building in domains that I am passionate about, but know little about.”
Convinced that the world is moving towards becoming a crypto-native economy, Daya added that he wants to “play a part in using trust, ease and education to onboard the next billion customers to a new financial system.”
Currently, Coinbase already offers a lending product, loans up to $1 million at 8% APR with monthly payments and no credit check. Though Bitcoin is used as collateral, payments are made by monthly ACH debit or through a linked USD wallet.
Square Loans, the small business lending division of Block, is off to a roaring start. The company originated 90,000 loans for a total of $756M in Q1, according to the company’s latest quarterly earnings. One cause of that was a foray into the Canadian market as part of the company’s strategy to offer all its products in every market it operates in.
“I would say that we have always felt that fast access to funds, whether it’s a customer’s own funds or access to credit has been a key part of our platform and a key part of what our customers need in good times and in uncertain times,” said Block CFO Amrita Ahuja. “And we’ve built a lot of data, a lot of heuristics machine learning around the ability to enable customers for access to those funds in a responsible way. Obviously, we do that today on the Square platform with our Loans — Square Loans product, which we were able to very quickly pause during the early days of the pandemic, pivot to PPP, and then relaunch. And now with originations there back to pre-pandemic levels with continued strong results, encouraging results we’ve seen with respect to loss rates and repayment rates.”
Despite Block feasting off of Bitcoin sales revenue last year, the company’s small business lending division, Square Loans, originated $850M in loans in the 4th quarter of 2021. That was spread out across 103,000 loans.
That brings the full year 2021 total to $2.45B, a new annual record for Square Loans, whose non-PPP related lending had dropped by more than 50% in 2020 when compared to 2019. It also put them ahead of rival OnDeck for the first year ever.
Square Loans was not mentioned by name during the company’s Q4 earnings call, but Square CFO Amrita Ahuja said, “We continue to believe our Square ecosystem is differentiated due to our integrated and cohesive set of products across the hardware, software, payments and financial services, serving seller needs in a more comprehensive way. We are making progress in surfacing incremental product adoption to serve our sellers across multiple vectors, with a goal of creating a more retentive and valuable relationship.”
Square Loans, formerly known as Square Capital, originated $594M in small business funding in Q3, bringing the company to $1.6B originated YTD. Square had already been recognized among the largest small business lenders this year so far.
The Q3 figure boils down to 83,000 individual loans.
Overall, Square Loans was mentioned very little in the company’s quarterly earnings call. Company CEO Jack Dorsey said “…there’s still a lot of opportunity for us to open more of our products in more of the markets that we’re already in, such as Square Loans in more of the places that we already exist.”
The coming of Hyperinflation, a prediction made by Dorsey on Twitter just weeks prior, went completely unmentioned in Square’s official reports.
On October 22, he tweeted, “Hyperinflation is going to change everything. It’s happening.”
There seems to be consensus the US is experiencing inflation in 2021, but few people of business intelligence are making a rational argument that we’re in the midst of hyperinflation. Such a scenario, if true, might mean that a cup of coffee could cost $200 by next year.
“It’s happening,” tweeted Jack Dorsey, the CEO of both Square and Twitter. “Hyperinflation is going to change everything.”
Hyperinflation is going to change everything. It’s happening.
— jack⚡️ (@jack) October 23, 2021
Perhaps Dorsey’s bearish view on cash, ironic given that his company operates Cash App, has something to do with his bullish views on cryptocurrency. Fifty eight percent of Square’s total net revenue in the 2nd quarter came from Bitcoin.
“While bitcoin revenue was $2.72 billion in the second quarter of 2021, up approximately 3x year over year, bitcoin gross profit was only $55 million, or approximately 2% of bitcoin revenue,” the company said at the end of Q2.
Square made no mention of inflation in its Q2 earnings, nor in the call with analysts that followed. The company makes more than $1 billion in small business loans per year, a business that would likely be impacted by “hyperinflation.”
A hyperinflationary economy would cause strange situations in low interest rate environments in which borrowers pay back far less than what they borrowed on a value basis. If rates are low and loan payments are fixed, the borrower might as well borrow everything they could from every source available and turn it into something that will keep up with price increases.
Dorsey’s comments weren’t a one-off. He doubled down on his prediction just seven minutes later.
It will happen in the US soon, and so the world.
— jack⚡️ (@jack) October 23, 2021
He continued by saying that hyperinflation wasn’t a wish, nor did he think it was positive. He then laughed at Steve Hanke, a well regarded economist at John Hopkins University for condemning his statements.
— jack⚡️ (@jack) October 24, 2021
If Dorsey is right, and we’re all paying $200 for a cup of coffee in 2022, he would actually be one of the first people to see it happening since so many small businesses, including coffee shops, rely on Square as their POS software.
Square Loans, the lending arm of the fintech bank Square, originated $627M of its Flex Loans in Q2, according to the company’s latest announcement. That brings the year-to-date total to $1.02B across 167,000 loans. The numbers produce a rough average of only $6,000 per loan.
“After pausing flex loan offers from early March to late July of 2020, we continued to expand loan offers during the second quarter behind improvements in underlying Seller GPV trends, nearing pre-pandemic quarterly origination levels for core flex loans,” the company said.
Square is on pace to meet or eclipse its pre-covid volume. (It originated $2.3B in 2019.)
Square touted much bigger news in the past few days, however, its planned acquisition of Australia-based Afterpay in a $29B all stock deal.
Square Capital has been reduced to just one of several banking products under the Square Financial Services umbrella. That’s one result of Square successfully becoming a bank earlier this year.
Loans will be one product offered alongside checking accounts, savings accounts, and debit cards.
Just as before, Square’s loans will be repaid by diverting a percentage of a business’s card sales. The methodology is derived from its merchant cash advance roots, but what’s different is that a Square loan has a fixed repayment term.
“Pay it back automatically,” Square says of its loan product. “You won’t have to schedule any payments. We just ask that you meet your minimum every 60 days.”
Square has originated more than $9 billion in small business loans since inception and is one of the largest small business lenders in the country.
Square Capital originated 78,000 small business loans in Q1 for a total of $392M. That figure does not include PPP lending, which comprised of 57,000 loans for a total of $531 million.
“After pausing flex loan offers from early March to late July of 2020, we have been measured in our ongoing ramp of offers to sellers,” Square said. “Revenue from Square Capital was down on a year-over-year basis due to a lower mix of flex loans during the quarter.”
Square Capital originated slightly under $1 billion in 2020, down from the $2.3 billion in 2019.
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