Square Capital Review 2021

Overview

Square Capital offers business loans to eligible Square sellers that are paid back with a set percentage of daily credit and debit card sales. Because of their repayment structure, Square Capital falls under the merchant cash advance category, rather than a more traditional term loan or line of credit. 

To qualify for Square Capital, you must use Square POS as your payment processor. Eligibility is determined by a seller’s Square payment processing volume, account history, and payment frequency. Square will extend an offer if you meet their eligibility criteria; you are unable to apply for this funding yourself.

Square Capital Details

Green checkmarkPros
  • Simple, flat fee
  • No credit score or time in business requirements
  • No lengthy application
  • Fast funding in just a few days
Red X markCons
  • Only available for Square POS users
  • By invitation only
  • Daily repayment can eat into cash flow
  • Unclear renewal process
  • Loan Amount

    $300 - $100,000

  • Loan Term

    18 months max.

  • Interest Rate

    1.10 - 1.16 factor rate

Qualifications for Square Capital

  • Annual Revenue

    $10,000

  • Time in Business

    N/A

  • Credit Score

    N/A

Square Capital Borrower Eligibility

Your eligibility for Square Capital depends on a variety of factors, including your business’s payment processing volume, account history, and payment frequency. Other criteria include:

  • Strong Square history and growing sales trend
  • Solid combination of new and returning customers

Square does not work with businesses:

  • That don’t use Square POS as their payment processor
  • That have an unusual Square payment history, such as multiple chargebacks or failed debits
  • Whose Square sales have decreased recently
  • That have used Square Capital to get cash advances by swiping their own card
  • That have a current or prior Square Capital loan that isn’t in good standing

What You Need to Apply

Square will require some basic personal and business information, like your social security number and EIN. While not required of every applicant, they may also require some additional information, including:

  • Business and/or personal tax returns
  • Articles of incorporation or organization
  • Secretary of State business registration
  • Business license
  • Invoice, purchase order, or bill of sale

How to Get a Loan With Square Capital

You will receive an offer via your Square dashboard if you have been pre-approved for Square Capital funding, so there’s no formal application process.

However, once you select your desired loan amount, Square will ask for some additional personal and business information to complete the underwriting process.

Application and Underwriting Process

If Square prequalifies your business for a Square Capital loan, you’ll see an invitation to fund with them on the “Capital” tab of your Square account dashboard. 

This invitation includes the maximum loan amount you’ve prequalified for, as well as Square’s flat loan fee, the total repayment amount, and the daily repayment percentage of your daily sales. You can click and drag the slider bar to select your desired loan amount, which will adjust the fee, total, and repayment percentage accordingly. 

An example of a Square Capital loan offer may look like:

  • $10,000 loan 
  • $1,400 loan fee
  • $11,400 total amount owed
  • 13% daily sales for repayment

The lower the loan amount, the lower the loan fee and percentage of daily card revenues will be, and vice versa.

If you proceed with the loan offer, Square will then verify your business’s financial information through their bank lending partner, Celtic Bank

Square Capital does not require a personal guarantee and, if your loan amount is $75,000 or less, you won’t need to provide collateral. However, if your loan amount is greater than $75,000, Square will file a UCC lien against your business.

If you pass the underwriting process, the capital will show up in the bank account attached to your Square POS account. Funds can be deposited as soon as the next business day but can take up to three days, depending on your own bank’s processing speed.

Repayment Process

The repayment process with Square Capital loans is simple. Square will automatically deduct a percentage of the daily credit and debit card transactions you run through your Square POS. You’ll be able to track your repayment progress through the “Capital” tab in your Square account.

You must repay at least 1/18th of your loan every 60 days. Keep in mind that you have to repay your Square Capital loan within 18 months, so it’s worth checking up on your progress to make sure you’re on track to do so.

Additionally, if you find yourself with excess cash flow that you’d like to put toward your Square Capital loan, then you can pay extra at any time—you’ll simply do so through the “Capital” tab in your account. This won’t reduce your overall repayment amount since you are charged a flat loan fee, but it will ensure that you make positive progress toward paying off the loan. 

Square doesn’t charge any prepayment penalties or late fees; however, if you still have an outstanding balance at the end of your 18-month term, Square may debit the remaining amount from your business bank account.

Renewal Process

Square provides very few details on Square Capital renewal eligibility, other than the fact that you may be eligible for a second Square Capital loan after you’re close to paying off your existing loan. 

Similar to your original Square Capital offer, you will have to wait to see if Square extends a renewal offer. If you are eligible for a Square Capital loan renewal, Square will let you know via email and your renewal offer will show up in your “Capital” tab.

Square Capital Customer Service

Square provides several customer support resources on their website, including a support center, how-to guides, video tutorials, and a community forum. You can also receive live support via phone, email, chat, and social media.

Square Capital Customer Reviews

When deciding if Square Capital is right for your business, it’s helpful to hear what other business owners have to say about the company and loan product. Positive Square customer reviews often focus on how easy it is to receive funding—since there is no formal application process—and the affordable loan rates. 

While the majority of Square Capital customer reviews are positive, there are also some criticisms to consider. Namely, negative reviews highlight poor customer service experiences—either not being able to get in touch with someone or receiving unhelpful information when you do—and the uncertainty of when or if you’ll receive a Square Capital offer. 

While customers who have received loan offers find the product fast and simple, those who have not, or those who haven’t received a renewal offer, find the process frustrating and confusing.

Top Alternatives to Square Capital

Rapid Finance
CAN Capital
Reliant Funding
PayPal Working Capital

Rapid Finance

CAN Capital

Reliant Funding

PayPal Working Capital

Fundera Score

3

Fundera Score

4

Fundera Score

4

Fundera Score

5

Products Offered

Short-term loans, merchant cash advances

Products Offered

Term loans; merchant cash advances

Products Offered

Merchant cash advances

Products Offered

Working capital loans

Factor rates

1.11 - 1.31

Factor rates

1.15 to 1.48 factor rate

Factor rates

Factor rates starting at 1.18

Factor rates

Unavailable

Minimum credit score required

550

Minimum credit score required

No minimum

Minimum credit score required

525

Minimum credit score required

N/A
Rapid Finance

Rapid Finance

Fundera Score

3

Products Offered

Short-term loans, merchant cash advances

Factor rates

1.11 - 1.31

Minimum credit score required

550
CAN Capital

CAN Capital

Fundera Score

4

Products Offered

Term loans; merchant cash advances

Factor rates

1.15 to 1.48 factor rate

Minimum credit score required

No minimum
Reliant Funding

Reliant Funding

Fundera Score

4

Products Offered

Merchant cash advances

Factor rates

Factor rates starting at 1.18

Minimum credit score required

525
PayPal Working Capital

PayPal Working Capital

Fundera Score

5

Products Offered

Working capital loans

Factor rates

Unavailable

Minimum credit score required

N/A

Frequently Asked Questions

Is Square Capital in Fundera's Network?

Square Capital is not in Fundera’s Lender Network. The Fundera team carefully vets all of the lenders in our network, and have determined that Square Capital either doesn’t have the technology to work with Fundera or does not offer a financing product that competes with the other lenders in its product class. We suggest considering another lender in this product class.

See if you qualify for similar products in Fundera’s Lender Network.

Christine Aebischer
Editor at Fundera

Christine Aebischer

Christine Aebischer is an editor at Fundera.

Prior to Fundera, Christine was an editor at the financial planning startup LearnVest and its parent company, Northwestern Mutual. There she wrote and edited on topics such as debt, budgeting, insurance, taxes, investing, and retirement. She has written for print and online on topics ranging from personal finance to luxury real estate.

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