Square Capital business loans review
Business financing of up to $100,000, but beware of daily repayments.
If you’re a small business owner looking for working capital to invest in inventory or expand to a new location, a business loan can help. Among your options is Square Capital, the lending arm of the point-of-sale system Square. Current Square merchants will like how easy it is to apply for business financing, but watch for short terms.
Do I qualify?
To be eligible for a loan with Square Capital, your business has a better chance at being approved if it:
- Uses Square’s point of sale system at least once a week.
- Generates at least $10,000 in annual revenue.
- Is a healthy, growing business.
What is Square Capital?
For businesses already using the Square credit card processor, Square Capital business financing program wants to help you grow your business. Launched by its parent company, Square, Inc. in 2014, Square Capital offers unsecured business loans to merchants that actively use Square’s point of sale software to process sales.
Square Capital offers business loans of $500 to $100,000. To date, Square Capital has extended over $2.1 billion in funds to more than 140,000 merchants.
What makes a Square Capital loan unique?
Because you already have a relationship with Square Capital through its Square credit card processor, applying for a loan is easy. Square Capital offers personally-tailored loans to eligible merchants based on their business history with Square.
Funds from Square Capital loans are deposited in as little as one business day following an accepted loan offer. You’ll repay the loan through daily repayments of a fixed percentage of your credit card sales. This means if business is slow, you’ll pay less and you won’t have to worry about payments and missed due dates. However, daily repayments can cut into your daily cash flow and make can impact your bottom line.
What are the benefits of a Square Capital business loan?
- Easy application process. Square Capital sends an alert to your Square account if you’re eligible for a loan. Because Square already has most of your business information on hand, the need for additional documentation is minimal.
- Simple repayment process. Repay your Square Capital loan hassle-free with an automated fixed percent of daily card sales.
- Quick access to funds. Once you’ve accepted your loan, you can access your funds in as little as one business day.
- No prepayment fee. Pay back your loan early without penalty or fee.
What to watch out for
- Limited eligibility. You can only be considered for a loan with Square Capital if you’re an active Square merchant.
- Daily repayments. Since Square requires you to pay back a percentage of your loan each day, this might not be the best bet for seasonal businesses who have slower months in the winter or summer.
- Inconsistent offers. Square Capital streamlines the application process by offering loans only to prequalifying borrowers. But this means there’s no guarantee that you’ll be extended a loan offer.
- No long-term loan options. Square Capital doesn’t offer loan terms longer than 18 months. If you require a longer loan term, you’ll need to seek alternate funding.
Compare more business loan providers
What does the Internet say about Square Capital?
Square is not accredited with the Better Business Bureau (BBB), but it does receive an A+ rating from the site. As of this writing, over 90% of the reviews on Square are negative and revolve around the business’s point-of-sale interface for invoicing and collecting credit card payments. Customers complain that their accounts are being held and their funds are not available for 90 days. When they’ve tried to resolve these issues, reviewers cite hard-to-reach customer service representatives who either never answered the phone or never called them back.
And while borrowers with this lender like its simple application process and ease of repayment, they too have had issues with customer service and complain about the inconsistency of Square Capital’s loan offers.
Over on TrustPilot, Square is rated 1.6 out of 10 stars, with similar complaints of funds being held, zero customer service and having their accounts closed for seemingly no reason. Few of these reviews are centered around Square Capital’s business loans in particular.
What other services does Square provide?
- Square Point of Sale. Square’s point-of-sale software combines payment processing, digital receipts and inventory management to allow for smooth merchant to customer interactions. Square’s point-of-sale system accepts credit cards, cash, checks, gift cards and mobile payments.
- Square Cash. Square Cash is a person-to-person money transfer service that operates through the Square Cash app or by email. Sending and receiving money is free for personal use, while businesses pay 1.5% to receive payments.
- Square Payroll. Square Payroll is a small business tool that streamlines the employee payroll process with digital time cards, online employee accounts, automatic direct deposit and tax filing services.
How do I apply?
Before applying, be sure you meet the eligibility criteria:
- You must be a preexisting Square client.
- Your business must generate at least $10,000 in annual revenue.
- You must process payments weekly.
Here are step-by-step instructions for how to apply:
What documents do I need to apply?
Square Capital already has most of the information it needs to issue you a loan, but it could request the following additional documentation:
- A valid US driver’s license.
- Business tax return.
- Business invoices, purchase orders or receipts.
I got the Square Capital business loan. Now what?
- Expand your business. With more working capital, you can invest in the expansion and growth of your business. Square Capital doesn’t restrict the use of your loan, so use your funds to hire new talent, renovate or purchase new equipment.
- Watch for new offers. Square Capital could extend a new loan offer to you once you’re close to repaying your initial loan. If you need access to more capital, you may have the option to take out another Square business loan.
Square Capital gives businesses that use their point-of-sale system access to convenient capital. However, complaints of poor customer service and problems with the Square interface raised a few red flags. It also may not be best for companies with seasonal sales because of the daily repayments.
Before accepting a loan with any lender, it’s a good idea to explore what other providers have to offer. Visit our comprehensive guide to business loans to compare lenders and investigate all of your options, or compare business loans like Square to see similar offers.
Frequently asked questions about Square Capital
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