Square Tests ‘Square Capital’ Cash Advance Program

    March 4, 2014
    Chris Crum
    Comments are off for this post.

Last week, a report from The Information said Square was testing a product to give merchants “thousands of dollars” in capital to help them grow, and that it was considering another round of funding that would delay an IPO.

This week, Fox Business reported that “people with knowledge of Square’s finances” say that the company is not ready to go public this year.

Now, Re/code is reporting that it has viewed two emails sent to business owners, which describe Square Capital, which offers to provide business owners with $7,300. Jason Del Rey explains:

In return, Square charges the owner $1,022, which works out to 14 percent of additional cost. As a result, the business owner will end up having to pay Square back $8,322 in total.

Square tells the business owner he or she has as long as needed to pay Square back. “Your $7,300 in Square Capital will only cost $1,022 regardless of how long it takes to pay back,” the email reads.

Square reportedly takes the money via 10% of credit and debit card sales each day until the money is paid back.

Square has made no formal announcement about Square Capital beyond the emails. It is, after all, just a pilot test. In fact, the company isn’t even commenting on it at this point.

I’d imagine that we’ll at least be hearing from businesses about their experiences with it before too long.

Image via Square

  • twlonghorn

    My business has actually taken part in this pilot. We received a loan fo $2800 and pay back just 10% of our sales until the balance is paid. Has worked flawlessly, and really helped us ramp up some much needed small equipment and supplies. I would recommend it in full confidence.

  • HoGraff

    My business took advantage of the Square Capital offer. We accepter $7400, with a cost of $833. Our total repayment amount was $8233. For us this was a welcome boost. It allowed us to make a major purchase and increase our advertising presence. We have seen an increase in sales and productivity.

    Even with the 10% of sales repayment, we have actually improved our cash flow and cash on hand. For us, the Square Capital program has been a wonderful experience and has opened up areas of growth for us that would have taken months or years to achieve otherwise.

    Obviously, every business is different. We asked ourselves if we could use the money to create an increase in sales that would exceed the 10% transaction cost. We also asked ourselves if we could afford a 10% sales hit if our investment didn’t work out as expected. The answer to both questions was yes, so the decision was easy. We are now two months into the program and have no regrets. I would recommend this program without reservation.