While Twitter (NASDAQ:TWTR) has been less of a good thing lately, Jack Dorsey’s other baby — Square (NYSE:SQ) — has been riding high. SQ stock has been a fantastic performer over the last year. Year to date, Square Inc. has surged by more than 138%.

Those gains for SQ have come from the firm’s continued revenue growth, smaller losses and growing market share in the tough payment processing sector.

Investors should be excited about Square’s doubling of revenues in a few short years and its growth. But what should really excite them about SQ stock going forward is its recent forays into business lending and retail inventory management.

For investors looking at SQ today, these areas are going to be what drives the firm forward. These features offers a perfect complement for its processing and point-of-sale services.

SQ Stock Benefits from Making Loans

Square is already a big hit with many smaller mom-and-pop retailers for its simple to use interface, low costs and ability to streamline their operations. The small business love for its namesake credit card reader is one reason why SQ has managed to grow its revenue from $850 million at its IPO in 2014 to more than $1.7 billion last year.

But its next evolution should help it grow those revenues even further.

Square has decided to step up its lending game with its subsidiary Square Capital. Loan amounts to business owners fall within the range of $500-$100,000 — with the average loan size hitting $6,000. That’s almost too small for even your local bank. Leveraging Square’s machine learning and automation software, approvals are swift and based on the merchant’s sales.

The success of Square Capital can’t be ignored in its short history. Last quarter, SQ handed out more than $318 million in loans, a 68% year-over-year increase. Even better is that thanks to its focus on A.I., machine learning and focus on quick approvals to current SQ clients, Square’s default rate is less than 4% for these loans. The fact that merchants pay back the loan via a percentage taken out of daily sales doesn’t hurt either.

The real win is that most of these microloans aren’t made to start-ups. Mom-and-pop store owners primarily use microloans to directly grow their underlying businesses, perhaps to buy an additional ice cream machine or new computers. That directly boosts sales — and lucrative swipes on Square’s POS systems. Moreover, it removes the risk of start-ups failing and defaulting on their loans.

That’s the real point. SQ will lend you the capital to grow, so you can continue using their ecosystem of tools and providing them with fees per every swipe on their system. By offering loans, it essentially gives extra leverage to its swipe fees.

And speaking of that ecosystem, it’s growing a tad bit larger.

In addition to its new lending efforts, SQ has rolled out a series of software and POS operations for retail clients. This includes a hefty dose of inventory management. According to the company, there are 450,000 small- to medium-sized retailers in the U.S. alone, and they generate over $700 billion in annual gross receipts. By providing solutions and data analytics to these mid-sized firms, SQ can now attract more businesses into its overall ecosystem, give them a loan and charge them 2.75% per swipe.

Square Inc Creates the Whole Enchilada

Square is setting itself quite nicely for hooking merchants and keeping them in the door. All of these efforts play off of each other and allow for additional revenue opportunities. For investors, that supports SQ stocks’ recent increases.

Dorsey and crew estimate that revenues for all of 2017 will be in the $2.14 billion to $2.16 billion range. That’s a roughly 27% year-over-year growth. Management at Square predicts much of that will come from additional merchants signing up and leveraging its entire product line. I suspect that SQ will be pretty close on the money with this. In the end, this should help the firm turn profitable sooner rather than later and justify further stock increases.

The Bottom Line: While SQ stock has surged, that rise could be justified. The firm’s future lies with adding more merchants into its system to pay lucrative swipe fees. With its retail management and micro-lending efforts, Square should be able to do just that.