Square, the mobile payments firm run by Twitter co-founder Jack Dorsey, has filed an application to become a new challenger bank, according to reports.
The startup, which was launched in 2009, will apply to become an industrial loan company (ILC), with the Federal Deposit Insurance Corporation. The new bank will be called Square Financial Services according to the Wall Street Journal.
An ILC is allowed to conduct some of the same operations as a traditional bank but can be owned by a business that offers non-financial services. However, traditional banks are unable to conduct operations which aren’t related to financial services.
According to a Square spokesperson, the new challenger bank will offer loans to small businesses. The firm already does so as part of a deal with Celtic Bank, however, the move will allow Square to offer loans on its own without relying on such a partner bank to issue them.
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