Square Capital Small Business Loans & Financing Review
Square Capital can be a good small business financing option if you’re already using Square. It’s a unique take on small business loans, and it’s all fast and easy. Square charges no compounding interest which can save a lot of money.
What we like:
No minimum credit score required
|Estimated APR||10% – 16%|
|Loan Amounts||$500 – $100,000|
|Term Lengths||3 – 18 months|
Square Capital provides funding to businesses seeking fast and simple financing. Loans funded by Square Capital can be used for a variety of purposes including:
- New equipment
- Cash flow management
- Increasing staff
- Other business needs
About Square Capital
Square Capital is a subsidiary of the Square company. The loans offered by Square Capital are issued by Celtic Bank which is based in Salt Lake City. Loans aren’t available to borrowers in North Dakota.
The Square Company defines its mission as providing the tools needed to empower business owners and provide accessibility for everyone to be part of the economy. The Square company is led by CEO Jack Dorsey, who is the CEO and co-founder of Twitter as well.
Along with Square Capital, other elements of the business available to small business owners include point-of-sale services, payments, and payroll options.
Square Capital is an online-only lender, and in order to be eligible, borrowers have to start selling with Square and taking payments through Square.
Square Capital Small Business Loans & Financing Overview
There are a few steps outlined by Square Capital for small businesses seeking financing. First, potential borrowers should sign up to take payments through Square, as mentioned. Then, they can log into their Square Dashboard and see if they have a loan offer.
If someone does have a loan offer, they can complete an application. The primary determination used when deciding eligibility for a loan through Square Capital is sales on Square. Eligibility can be based on Square processing volume, payment frequency, and account history.
Along with these main factors, other factors may play a role in the approval decision with Square Capital as well. This can include the mix of new and returning customers, activity level on Square, and your overall trends in sales with Square. Companies that appear to grow more quickly will likely get a larger loan offer. If someone is eligible, Square proactively contacts them and offers a loan customized to their needs.
Basic Information: Rates, Terms, Fees, and Limits
Loan amounts from Square Capital can vary and invitations and approvals are based on factors like sales history. There are no application or closing fees, no fees for repaying loans early, and there is no compounding interest. Repayment is handled as a fixed percentage of daily sales. Business owners pay more when their sales volume is high and less when it’s lower.
There is a requirement that borrowers repay at least 1/18 of their beginning loan balance every 60 days. Loans must be repaid in full within 18 months of the acceptance date.
If a loan isn’t repaid in full at the end of the 18-month period, the full remainder of the loan balance is due at that point.
There are quite a few things that business owners might find advantageous about Square Capital. First, merchants can proactively receive loan offers tailored to their business. This means business owners can save time sifting through offers or reaching out to small business lenders to see if they qualify.
Many merchants are also likely to find the repayment options with Square Capital beneficial. There is a fear about getting financing for a small business and making payments when sales are slow. Square Capital addresses this by making payments based on a percentage of sales. This is done automatically, so it makes it effortless for the business.
Funding is fast as well, and if a small business is approved, funding can be deposited into a bank account the next business day. Fees are transparent, and you don’t have to visit a bank or talk to a loan officer to receive financing.
The main downside with Square Capital is that you have to be invited, and you have to have an established history of taking payments with Square for eligibility. According to Square Capital, they look for businesses that have processed a minimum of $10,000 in a year.
Also, loans are due to be paid in full within 18 months which can be a relatively short period of time.
Overall, Square Capital can be a good small business financing option if you’re already using Square. It’s a unique, modern take on small business loans, and it’s all fast and easy. However, it’s not for everyone, especially since you need to have a history of using Square, and not every business is going to be able to make that happen.4.43 Square Capital Small Business Financing