Square starts offering data driven cash advances to small businesses

Posted May 28, 2014

Mobile payment processing company Square has announced a new vertical business that depends on the vast amount of data that its products collect. The new offering is called Square Capital, which is a service that enables the company to offer cash advances to businesses in its network.

Square Capital has been piloted for several months. Square said it has issued “tens of millions” in cash advances to thousands of merchants.

This service will be exclusive to merchants ?running their business on Square.? Square will reach out to businesses that it feels could use additional capital to expand or energize products in some way. Square will offer this credit to companies that are capable of paying it back.

Square will utilize its data on a merchant to determine how much cash it can offer them and what the fees might be. Square will also determine what the payback percentage will be.

The payback will come out directly from sales. So this means that the amount being paid back will go up and down depending on your sales. This means you will not be forced to pay back a flat amount whether you had a bad month or not. The fees appear to be 1/8th to 1/10th of what you would pay a typical loan organization.