Square and other tech firms are jumping into small business loans

    Billy Joe Wilson was cooking up tater tots and chicken-fried-steak sandwiches in a food truck on the Texas Gulf Coast last fall when an app on his tablet asked if he wanted to borrow $5,000.

    As The Wall Street Journal details, the offer came from a unit of Square Inc., the tech firm that made the devices Wilson uses to process customers’ card payments.

    For weeks, its algorithms had quietly observed Wilson’s sales and then decided he was creditworthy. With a few swipes, he accepted Square’s terms and got the money within days. He later borrowed more than $150,000 to open a gastropub nearby.

    Square, best known for its white credit-card readers that plug into smartphones, is

    part of a wave of the tech giants making inroads into the banking business. The firm, run by Twitter co-founder Jack Dorsey, is already well-versed in financial services through its payments business.

    PayPal has extended more than $6 billion in small-business loans since 2013, using data it collected by processing payments for Internet retailers.

    Older tech companies and financial firms have also recently jumped into the fray. Last year, Intuit started offering loans to businesses that use its Quickbooks software based in part on the data contained in their accounting statements.

    First Data Corp. now lets businesses that use payments devices from Clover, a Square competitor that it owns, take out loans based on their sales history. Read the full story.

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