Square Capital is only available for merchants who use Square, but still might be appealing as it doesn't have credit score requirements or extra fees.
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| Total Rating | 4.3 |
|---|---|
| Rates & Fees3.8 | |
| Services3.4 | |
| Eligibility Requirements4.9 | |
| Application4.8 | |
| Sales & Advertising Transparency4.8 | |
| Customer Service4.2 | |
| User Reviews4.8 | |
Table of Contents
Square, the most popular and widely known mobile POS on the market, has entered the world of fast, automated business loans with Square Capital. Square Capital is a small-business loan service offered to Square users who need funds to grow their businesses.
Square Capital is only available to merchants who use Square (or another POS that has a partnership with Square). Because Square is a payment processor and already has plenty of information on your business and finances, Square Capital does not have a lengthy application or an inconvenient repayment process.
Ultimately, Square Capital is a convenient and relatively inexpensive source of capital. However, some customers have expressed frustration, either because they do not know when they will receive a loan offer or because they are ineligible for the service.
| Services3.4 |
|---|
| Lending Services 1.0 |
| Lending Limits 5.0 |
| Payment Portal & Mobile App 5.0 |
When compared to other online lenders, Square Capital falls far short in terms of its services. Square Capital only offers short-term loans of up to $350,000 to Square users. These limitations negatively impacted Square’s rating for services. However, its lending limits and mobile app for both Android and Apple products added points to give Square Capital a score of 3.4/5.
It’s worth pointing out that Square Capital’s financial product isn’t a typical one; it has some traits of a merchant cash advance as well. Essentially, Square will extend you a lump sum, and if you accept, you’ll need to repay that amount plus a flat fee (more on that below) to Square. Repayments are deducted from your daily credit and debit card sales the same as they would be in a merchant cash advance.
| Eligibility Requirements4.9 |
|---|
| Availability 5.0 |
| Borrower Qualifications 4.8 |
| Transparency 5.0 |
These are the qualifications required to get a loan from Square Capital:
| Borrower Qualifications | |
|---|---|
| Time In Business | N/A |
| Credit Score | N/A |
| Revenue | $10,000/year |
According to Square, you must also have used Square for at least 20 days out of the last year and must also meet the following requirements:
The following may disqualify you from receiving an offer from Square:
Square Capital serves a variety of businesses in all 50 states provided they are Square users. Typical credit score, collateral, and other requirements do not apply, potentially making this a viable option for Square users who may not qualify for funding elsewhere. For these reasons, we gave Square a near-perfect 4.9/5 rating for its eligibility requirements.
Be aware that Square Capital is a bit unusual in that you do not apply for a loan; you will receive a Square Capital loan offer if you’re eligible. Check out the Application Process section for more information.
| Rates & Fees3.8 |
|---|
| Pricing 3.7 |
| Affordability 3.8 |
These are the rates and fees for Square Capital’s loan program:
| Rates & Fees | |
|---|---|
| Borrowing Amount | $100 - $350,000 |
| Term Length | No set maturity date Maximum of 18 months |
| Factor Rate | x1.10 - x1.16 |
| Origination Fee | None |
| Effective APR | Learn more |
| Collateral | UCC-1 blanket lien for loans over $75,000 |
Square does not use interest rates. Instead, it charges a one-time fee, normally called a “factor rate” or “flat fee,” that is paid back over the life of the loan. Be aware that this means you cannot save money by repaying your loan early (which you would be able to do if the loan had an interest rate).
According to the Wall Street Journal, the factor rates offered by Square are typically between 1.10 and 1.16, which means that you will have to repay between $0.10 and $0.16 in fees per dollar borrowed. Square will disclose your borrowing fee before you accept the loan. Unfortunately, Square does not disclose these rates on its website, which we took into consideration for our rating of 3.8/5.
Because the loans are repaid by deducting a percentage of your credit card sales (which fluctuate day-to-day), there is no set date on which your loan will be repaid. However, you do have a maximum of 18 months to repay your loan. To keep you on track, you have to repay at least 1/18th of your loan every 60 days. If your daily card sales cannot cover the minimum amount, Square Capital may debit a bank account you have linked to Square. Merchants also have the option of making additional payments or paying off the loan at any time.
Square does not require collateral for loans up to $75,000. For loans exceeding $75,000, a blanket lien is required.
| Application4.8 |
|---|
| Application Process 5.0 |
| Application Timeline 4.5 |
Square monitors user accounts to determine if a business is eligible for a Square business loan. If your account is eligible, you will receive an email and a notification on your Square account. You can find your offers under the Capital tab in your account.
Once you receive the alert from Square, getting the money is pretty straightforward: simply decide how much you want from the options presented to you and request the funds. Square will use all the information it already has to verify your identity, though a rep might reach out to ask for additional documents if necessary. This lender will not check your credit to make a decision, so you do not need to worry about a credit check affecting your score.
Once Square has verified your information, the money will be deposited into the bank account hooked up to your Square account within one to three business days. After you receive the loan, Square will automatically deduct its cut from any credit or debit transactions you process through its service. If you want to repay part or all of the loan, you can do so via the Capital tab on your dashboard.
It is this straightforward and fast application and funding process that led us to give Square Capital a rating of 4.8/5 in this area.
If you’ve received a Square Capital loan in the past, some customers have reported receiving a second loan after paying off 60% to 80% of their existing Square Capital loans. However, it is important to note that you may not receive a second or subsequent loan offer, even if you have qualified for or paid off Square Capital loans in the past.
| Sales & Advertising Transparency4.8 |
|---|
| Sales Practices 5.0 |
| Web Presence 4.5 |
Square provides a fair amount of information via the main Square Capital web page and the Square Capital support center. You should have a good idea of what to expect from this service by reading those documents. It would be nice to see more information about rates and fees, which is why we gave Square Capital a 4.8/5.
| Customer Service4.2 |
|---|
| Personal Support 3.9 |
| Self-Service 5.0 |
Although Square’s customer service has been lacking in the past, Square has drastically improved its customer support in the last few years.
| Square Capital Customer Service | Availability |
|---|---|
| Phone Support | |
| Email Support | |
| Support Tickets | |
| Live Chat | |
| Dedicated Support Representative | |
| Knowledge Base or Help Center | |
| Videos & Tutorials | |
| Company Blog | |
| Social Media |
There are a few different ways to contact Square, including email, live chat, phone, Facebook, and X. Additionally, Square has implemented a seller community forum, where you can get answers from Square representatives and other Square sellers. Because Square Capital isn’t lacking in this area, we rated it 4.2 out of 5 stars for customer service and technical support.
| User Reviews4.8 |
|---|
| User Feedback 5.0 |
| Review Site Aggregate 4.5 |
Square gets mainly positive reviews for its small business loans, boasting a 4.2/5 rating (based on 1,200+ reviews) on Trustpilot. There are also several video testimonials on its website and several merchant reviews in its Town Square Business Resource Center. The overall positive feedback and online ratings from users are why Square Capital scores a 4.8/5 in our ratings.
There are a few negative reviews worth noting before you agree to a Square Capital loan:
In general, merchants are happiest with the following:
If you are eligible, Square Capital is a convenient and relatively inexpensive source of financing. This company has streamlined the lending process, so it’s almost entirely hands-off. You don’t need to fill out a lengthy application or remember to write checks every payment period. For these reasons, we’ve given Square Capital an overall rating of 4.3/5.
However, Square Capital is not without problems. If you have been denied a loan or Square Capital is too undependable for your business, you do have other options available.
It’s also worth noting that if your business is doing well enough to be eligible for this service, it might be time to switch to your own merchant account. If you accept an advance from Square, you’re tied down until you repay the company. That said, if you need short-term financing, Square offers a very compelling deal. Sticking around for a few extra months might be worth it.
Merchant Maverick has been researching and reviewing business lenders since 2015. Our writers have tested over a hundred different funding products, including traditional term loans, online loans, lines of credit, start-up loans, merchant cash advances, and equipment financing. In each review, we evaluate rates and fees, services, eligibility requirements, application process, sales and advertising transparency, customer service, and user reviews.
Read more about how we rate business loans and funding products.
When comparing different lenders and loan products, we consider many data points, including the ease and transparency of the application process, interest rates, repayment structure, sales ethics, time to funding, revenue and time in business qualifications, and credit score requirements. Our lists of the best funding products include only those we’ve deemed worthwhile from multiple vantage points, and often share qualities such as widespread accessibility across fifty states, low rates, flexible requirements, and competitive borrowing amounts.
We spend an average of 10-15 hours researching and updating each one of our lists, making sure the loans and funding products included meet our internal standards for quality and reputation.
The Merchant Maverick Seal of Approval 🏆
Square Capital |
|---|
After hours of in-depth research and evaluation, we can confidently recommend this brand to our readers. Get started today and see Square Capital for yourself.
The Merchant Maverick Seal of Approval 🏆
Square Capital |
|---|
After hours of in-depth research and evaluation, we can confidently recommend this brand to our readers. Get started today and see Square Capital for yourself.
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Merchant Maverick’s ratings are editorial in nature, and are not aggregated from user reviews. Each staff reviewer at Merchant Maverick is a subject matter expert with experience researching, testing, and evaluating small business software and services. The rating of this company or service is based on the author’s expert opinion and analysis of the product, and assessed and seconded by another subject matter expert on staff before publication. Merchant Maverick’s ratings are not influenced by affiliate partnerships.
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Our team of experts spends hours on every review so that we can find the best companies to recommend to our readers. Square Capital made the cut.
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