Bloomberg
Square Inc. is hoping a new partnership with eBay Inc. will help it drive further growth for its Square Capital lending program.
EBay EBAY, +0.38% and Square SQ, +0.31% announced Tuesday morning that Square Capital would soon become available to eBay merchants wishing to expand their operations. Sellers will be able to apply for $500 to $100,000 to help grow various aspects of their businesses, eBay said.
Square maintains that Capital provides loans to small businesses that are traditionally underserved by the broader financial ecosystem. The company assesses risk and eligibility of applicants “by taking a holistic view of an applicant’s financial profile” and can sometimes return a decision within a business day.
Capital is a fast-growing area of Square’s business, albeit a somewhat controversial one. Square facilitated loans totalling $339 million in the first quarter, up 35% from a year earlier, but the company’s credit exposure presents some cause for concern.
“In an economy that doesn’t grow as fast, where businesses can’t repay unsecured loans, Square might not be as well positioned,” DA Davidson research director Gil Luria told MarketWatch last month.
Small-business lending is a hot area in fintech right now, and PayPal Holdings Inc. PYPL, +2.44% once part of eBay, is also a player. The company has a program called Working Capital that provides loans to PayPal merchants based on their sales histories. The company gets repaid by automatically taking back a portion of PayPal sales that the merchant does.
Square shares are up 1.3% in premarket trading, and they’re up 168% over the past 12 months. The S&P 500 SPX, +0.66% has gained 14% in that time.