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ProfileCompany or group

Square

Lender or loan platform

PPP
Type
Company or group
Role
Lender or loan platform
Programs
PPP
Updated
  • Type: Public payments and financial-services company. Small-business lending arm operated as Square Capital.
  • Legal entities: Square, Inc. (renamed Block, Inc. in December 2021; NYSE: SQ, later XYZ). PPP lender of record in 2021 was Square Capital, LLC. 2020 PPP loans through the Square flow were issued by Celtic Bank, a Utah-chartered industrial bank.
  • Founded: 2009, San Francisco, by Jack Dorsey and Jim McKelvey.
  • HQ: San Francisco (Block later adopted a distributed-work model).
  • CEO: Jack Dorsey (continuous through and after the pandemic; titled "Block Head" after the 2021 rename).
  • Role in PPP: Borrower-facing application channel for its existing seller base. In 2020, Square Capital arranged loans issued by Celtic Bank; in 2021, Square Capital, LLC appears in SBA data as a direct lender of record.

In the archive

Pandemic-role map

  • Reader shorthand: payments platform lending to its own merchant base.
  • What Square did for borrowers: offered PPP applications inside the Square ecosystem, prefilled applications for Square Payroll customers from data it already held, and disbursed into linked seller bank accounts.
  • Where responsibility sat: in 2020, Celtic Bank was the issuing lender named on Square's own PPP page; in 2021, Square Capital, LLC held the lender-of-record row in SBA data.

Before the pandemic (2009–early 2020)

Square built card acceptance for micro-merchants, then layered on payroll, banking, and Square Capital, a small-business financing product that advanced funds against a seller's payment volume, with Celtic Bank as issuing partner. By March 2020 it had a national base of very small merchants whose payment data it already held.

During the pandemic (March 2020 – mid 2021)

Fee waivers and a lending pause, March to July 2020

On March 24, 2020, Square withdrew its full-year guidance and said seller payment volume over the prior ten days was down about 25% from a year earlier (Square, business update, Form 8-K Exhibit 99.1, March 24, 2020). The next day its COVID-19 page told sellers it was refunding all March software subscription fees on eight products. It was also waiving Square Payroll fees in any month without a payroll run through June, and curbside-pickup and delivery fees for three months (Square, "Support and Response Resources" (March 25, 2020)). By April 20 the waiver covered April as well, subscriptions could be paused without billing, and delivery fees were waived through June 30 (Square, "Support and Response Resources" (April 20, 2020)). The first-quarter shareholder letter also reported "temporary relief on minimum repayments for outstanding Square Capital loans." From mid-April to mid-May, it said, cash back on Square Card purchases at Square sellers rose to 10% from 2.75% (Square, Q1 2020 shareholder letter (May 6, 2020)). Subscription fees resumed in May 2020 (Square, Form 10-K for 2020 (Feb. 23, 2021)); at the end of June, fewer than 10% of sellers with subscriptions had paused them (Square, Q2 2020 shareholder letter (Aug. 5, 2020)).

From mid-March Square also paused new offers of its core "flex" loans to sellers. It resumed them in late July "under stricter eligibility criteria" (Square, Q1 2020 shareholder letter (May 6, 2020); Square, Q2 2020 shareholder letter (Aug. 5, 2020)). It booked first-quarter reserves of $79 million against transaction losses and $22 million against outstanding Square Capital loans, slowed hiring for nonessential positions and suspended travel (Square, Q1 2020 shareholder letter (May 6, 2020)). On June 23 it posted "Why Square Uses Reserves," about a different kind of reserve: a percentage of a seller's processing volume that Square sets aside against chargebacks and releases on a rolling basis. The post said Square had "recently" begun using the tool and that fewer than 0.3% of sellers had a reserve. It was explaining the practice, it said, "given increased interest, particularly in light of COVID-19" (Square, "Why Square Uses Reserves" (June 23, 2020)).

2020: Square Capital arranged, Celtic Bank issued

Square's archived PPP page from June 14, 2020 targeted sole proprietors, self-employed workers, and small businesses inside the Square ecosystem. It said Square Capital arranged the loans and that all loans were issued by Celtic Bank, a Utah-chartered industrial bank. Square Payroll customers were told their applications would be simpler because Square had already filled in much of the information from what it knew about the business. The page still required payroll documentation, identity information, a valid bank account, and evidence the business was operating by February 15, 2020, and stated that approved funds would arrive one to ten calendar days after SBA approval.

Square Capital made no loans in the first PPP round, its first-quarter letter said, and began in the second round with its partner bank (Square, Q1 2020 shareholder letter (May 6, 2020)). On April 20 its COVID-19 page told sellers the first round "has been fully distributed" and that they could still apply with another lender (Square, "Support and Response Resources" (April 20, 2020)). By June 10, Square said, it had facilitated more than $820 million in loans to more than 76,000 businesses from more than 140,000 applications for more than $2 billion, an average under $11,000. By its count, non-employer firms took 50,000 loans for $290 million and employer firms 26,000 for $530 million (Square, "PPP in Review: Square Capital Has Facilitated 76,000+ Small Businesses Loans Across All 50 States" (June 15, 2020)).

SBA's loan-level data list 80,618 loans with Celtic Bank as originating lender and Square Capital as servicer, approved between April 27 and June 30, 2020, for $858.6 million (SBA PPP FOIA loan-level data). Square's 2020 Form 10-K put the year's figure at $857 million "excluding cancelled loans" and said Square sold $399.0 million of them to an investor. It pledged loans it kept to the Federal Reserve's PPP Liquidity Facility, which lent against them without recourse at 0.35%; $464.1 million of those advances was outstanding at the end of 2020 (Square, Form 10-K for 2020 (Feb. 23, 2021)).

2021: Square Capital as lender of record

The 2021 page kept the Square Capital structure and set out the second-round rules (First and Second Draw tracks, the 300-employee Second Draw cap, the 25% revenue-decline test and the 3.5x hospitality multiplier). SBA's PPP FOIA loan-level data record Square Capital, LLC as lender of record on 72,564 loans totaling about $681.8 million, an average loan of about $9,396. The loans were approved from February 10 to May 19, 2021, and 50,404 of them were second-draw loans (SBA PPP FOIA loan-level data). Under the 2021 rules, a lender's fee on a loan of $50,000 or less was the lesser of 50 percent of the amount disbursed or $2,500 (86 FR 3692 (Jan. 14, 2021); 86 FR 3712 (Jan. 14, 2021)). At SBA's schedule, Square Capital's fees come to an estimated $145.6 million, 21% of the principal (estimate from SBA PPP FOIA loan-level data). Square's first-quarter 2021 letter said "the vast majority of our PPP loans were distributed to sellers with fewer than five employees" (Square, Q1 2021 shareholder letter (May 6, 2021)). On April 22, 2021, Square announced it was a "technology partner" in SBA's $28.6 billion Restaurant Revitalization Fund. Food and beverage sellers that had processed payments with Square in both 2019 and 2020 could apply from its dashboard (Square, "Square Announces Participation in the Small Business Administration's Restaurant Revitalization Fund Distribution Effort" (April 22, 2021)).

What the company told investors

Square's second-quarter 2020 letter reported about $873 million of PPP loans to over 80,000 small businesses in the quarter (Square, Q2 2020 shareholder letter (Aug. 5, 2020)); SBA's data show $871.7 million for the Celtic/Square Capital loans as first approved (SBA PPP FOIA loan-level data). Square's 2020 Form 10-K said Square Capital had facilitated about $857 million of PPP loans to more than 80,000 small businesses by December 31, 2020; the 2021 Form 10-K updated that to about $1.5 billion and more than 150,000 loans (EDGAR PPP extraction). Square's SEC filings also record participation sales ($399.1 million sold by March 31, 2022), references to the PPP Liquidity Facility, and PPP-associated revenue recognized as forgiveness ran ($24.3 million for the six months ended June 30, 2021; $37.6 million for the nine months ended September 30, 2021; $51.5 million in the first quarter of 2022).

Square recognized PPP revenue over each loan's life and the remainder when a loan was forgiven. Its PPP forgiveness revenue was $2 million in 2020, $96 million in 2021 and $68 million in 2022 (Block, Q4 2022 shareholder letter (Feb. 23, 2023)). SBA's data show 78,200 of the 80,618 Celtic/Square Capital loans of 2020 forgiven and 1,456 charged off; of the 72,564 Square Capital loans of 2021, 69,811 were forgiven and 1,763 charged off (SBA PPP FOIA loan-level data).

SEC totals cover both years; the SBA row covers only 2021

The SEC-disclosed "facilitated" totals cover the broader Square program across both years; the SBA lender-of-record row covers only the 2021 Square Capital book. The 2020 Square-channel loans sit inside Celtic Bank's separate SBA row (167,201 loans / $4.49 billion across all of Celtic's partners); SBA's data name Square Capital as servicing lender on 80,618 of them.

Headcount grew; five executives got raises

Full-time headcount rose from 3,835 at the end of 2019 to 5,477 a year later, 8,521 at the end of 2021 and 12,428 at the end of 2022 (Square, Form 10-K for 2019; Square, Form 10-K for 2020 (Feb. 23, 2021); Block, Form 10-K for 2021; Block, Form 10-K for 2022). The 2022 figure follows Block's acquisition of Afterpay, completed on January 31, 2022 (Block, Form 10-K for 2022). The California EDD WARN reports for 2019–20, 2020–21, 2021–22 and 2022–23 contain no notice from Square or Block. Neither Square nor Block appears as a borrower in SBA's PPP data (SBA PPP FOIA loan-level data). Jack Dorsey's salary stayed at $2.75 a year. Square's compensation committee reviewed the base salaries of five other named executive officers in April 2020, the month Square waived its sellers' April subscription fees. It raised them to $475,000 from $450,000, effective April 1, "in order to improve competitive alignment with our peers" (Square, 2021 proxy statement (April 29, 2021)).

After the pandemic (mid 2021 – present)

Square, Inc. renamed itself Block, Inc. in December 2021. The PPP book ran down through forgiveness and participation sales, showing up in filings as forgiveness-driven revenue. No PPP-specific enforcement action against Square Capital or Block has been located: no FTC order, no False Claims Act settlement, no SBA suspension, no congressional case study (the House Select Subcommittee's December 2022 fintech report examined Blueacorn, Womply, Kabbage, Bluevine, Cross River, and Customers Bank). Square Capital continued after the emergency as Square Loans, which lends to Square sellers through Block's own industrial loan corporation, Square Financial Services, open since March 2021 (Block, Form 10-K for 2021).

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