PROS / There are no repayment minimums with Square Capital.
CONS / You must be a Square customer to qualify.
VERDICT / Square Capital offers low repayment costs and doesn't require a personal credit check, making it a good choice for a new small business owner.
Square is a payment processor that caters to small businesses and individuals, enabling them to accept credit cards using a mobile app and the company's Square Reader. Square also offers point of sale software Square Register, a payment processing program for online storefronts called Square Market, and a person-to-person money transfer program called Square Cash. The company also offers merchant cash advances as Square Capital.
If you process credit cards through Square, you could be eligible for a merchant loan from just a few thousand dollars up to tens of thousands of dollars from Square Capital. The lender's repayment costs are among the lowest in our review, and its repayment terms are among the most flexible, which is why it earns the Top Ten Reviews Silver Award.
Square Capital has some of the lowest repayment costs in our review, with averages ranging from 11 to 15 percent. You won't pay application costs or an origination fee. Since this is unsecured financing, you won't have to put up collateral, and the company doesn't require you to provide a personal guarantee.
There are no repayment minimums, which means that if business slows and sales are lower than anticipated, you don't have to make catch-up payments in order to be current on the advance. Square Capital does not charge penalties, including a prepayment penalty, or additional fees. Unlike some of the top business cash advance companies we reviewed, there is no incentive discount or rebate if you repay the financing early.
You can use alternative business funding you receive from Square Capital to invest in the growth of your small business by purchasing inventory, upgrading equipment or launching a marketing campaign. You can monitor your repayment progress through the Business page of your Square Dashboard, which shows the amount you've paid, the remaining balance and a daily summary of your processed card sales that notes the amount of the payment to Square.
In order to qualify for a merchant cash advance, you must be a Square merchant, which means you already use Square as your credit card processor. You can't even speak with a Square Capital representative over the phone unless you're an existing customer with a customer code. Even if you are, the company doesn't offer quotes over the phone.
After you've established a history with Square and have a sufficient processing volume, Square Capital invites you to accept a merchant cash advance by adding a link to your Square Dashboard and by sending you an email that lets you know you've been preapproved to receive financing. The benefit of this application process is that it's convenient; you don't have to spend time filling out and submitting an application and gathering statements to fax or upload; all you have to do is accept the offer.
Once you accept the financing offer, you can receive funds within one business day, with funds deposited into your business bank account. Square Capital is one of two merchant cash advance companies in our review that doesn't require you to submit to business and personal credit checks in order to qualify for a merchant cash advance.
Square Capital's eligibility requirements and details about its financing program are available on its website. Its support center provides a well-organized assortment of FAQs and support articles as well as a blog with tips and advice for small business owners.
Working capital loans for small businesses from Square Capital are repaid as a percentage of daily credit and debit card sales. The hold-back rate, the percentage of your sales that Square Capital keeps and applies to your advance, ranges between 9 and 13 percent, which is one of the lowest hold-back rate ranges in our review.
Repayment terms are approximately 10 months, but Square Capital is flexible in that there is no penalty if your business slows and it takes you longer than you anticipated to repay the advance. After you successfully repay the cash advance, you may be eligible to receive additional financing.
Square Capital provides merchant cash advances to small businesses that process their credit cards with Square. If you accept an advance from the company, you aren't required to pay back a minimum amount within a certain time frame, which lessens the burden of borrowing money when your business experiences a sales slump.