Block Gets the FDIC’s OK To Take Consumer Cash App Borrow Loans In-house

Square and Cash App parent Block Inc. announced late Thursday its Square Financial Services Inc. industrial bank has received approval from the Federal Deposit Insurance Corp. to make consumer loans through Block’s Cash App Borrow feature.

Square Financial Services launched as a Salt Lake City-based, FDIC-chartered industrial bank in 2021 to offer business loans and savings accounts to businesses. Previously, Cash App Borrow loans were made through a banking partner. Block reportedly began testing Cash App Borrow in 2020. The feature lets consumers borrow up to $200 and have up to four weeks to repay the loan. The ability to make loans directly to consumers means Block no longer has to share revenues earned on the loans with a banking partner.

“This is a revenue-enrichment move that doesn’t surprise me because Square and other companies like it are consolidating third-party services,” says Cliff Gray, principal at Gray Consulting Ventures LLC.

Block has positioned Cash App Borrow as an alternative to other short-term borrowing options for consumers, such as payday loans. As of Dec. 31, the average Cash App Borrow loan was less than $100 and was repaid in a month, Block says. The San Francisco-based company says consumers can take out a loan at less than 1/6th the cost of a payday loan, which according to the Federal Reserve Bank of St. Louis has an average annual percentage rate of 391%. “If consumers need a payday loan, every dollar saved in terms of loan costs matters,” says Gray. 

Block reported that nearly $9 billion in Cash App Borrow loans were originated in 2024 and that the service had 5 million active users.

Cash App Borrow has a “historic loss rate” of less than 3%, according to Block. Customer eligibility and borrowing limits are based on such factors as customers’ state of residence, Cash App product usage and activity, and on-time repayment history, Block says.

Receiving FDIC approval to make loans to consumers through Cash App Borrow will not impact the terms of current outstanding loans, including payment schedules, Block adds. Square Financial Services will begin servicing and originating Cash App Borrow loans in the coming weeks “with a gradual, disciplined approach to ramping volumes over the course of the coming quarters,” Block says.