09 October 2015

Square moves into small biz lending

28 May 2014  |  6806 views  |  0 square stand

Payments firm Square is moving into the lending business, offering its merchant customers cash advances.

Square Capital is aimed at small businesses that face a tough time going through the arduous process of getting capital from traditional lenders.

Because the service is only open to merchants that use the Square Register technology, there is no application process - Square bases its decision on whether to lend and how much to advance on the processing volume and history data it holds on its users.

Firms get the money as soon as the next day and the money is then automatically paid back - along with a flat fee - as a set percentage of daily card sales. Although Square says that it expects sellers to pay back the loan in around 10 months, there are no penalties if it takes longer.

The service has already been trialled by thousands of merchants during a pilot programme that saw tens of millions of dollars advanced. A survey of those that used the service shows that 85% are "extremely likely" to recommend it.

The move into lending could prove more profitable than payment processing. Earlier this year it emerged that, despite revenues of $550 million, Square posted a loss of around $100 million in 2013 as it struggled with the thin margins on the 2.75% fees it charges merchants

Comments: (0)

Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board, sign up now.

Related blogs

Create a blog about this story (membership required)

Related stories

25 April, 2014
22 April, 2014
21 March, 2014
07 November, 2013
16 October, 2013
25 September, 2013
25 September, 2013

Related company news


Your browser is unable to support Flash files.

Top topics

Most viewed Most shared
European Parliament rubberstamps Payment S...
7452 views comments | 41 tweets | 46 linkedin
Faster Payments eases access for challenge...
4915 views comments | 20 tweets | 25 linkedin
Chinese hackers breach LoopPay
4631 views comments | 8 tweets | 6 linkedin
From biometrics to one-time passcodes, Mas...
4375 views comments | 12 tweets | 18 linkedin
Hacker slams Danske Bank for alleged secur...
4354 views comments | 7 tweets | 8 linkedin

Featured job

to £90K base, double OTE, share options
London, UK

Find your next job