Square Small Business Loan Review (December 2022) – Pros, Cons, Features, & Pricing

You are probably on the lookout to get an in-depth Square small business loan review. While Square is a popular Point of Sales (POS) system, it also funds businesses. However, there is an eligibility catch for the loan, and this Square small business loan review looks to clear the air.

Square is a leading point of sales system helping merchants manage financial transactions. Launched in 2012, Square started offering merchant cash advances in 2014 and has lent over $9 billion. Unlike traditional banks, you do not apply for a loan because Square determines your eligibility.

In the following Square small business loan review, you will learn about the company and its products. Moreover, you will also learn how to get started and other alternatives to check out if Square is not the best fit, so read on.

Editorial Note: Comparewise is supported by our readers. When you find products and services through links on our site, we may earn commission.

Last Updated: Nov 25, 2022

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The next move is yours with a small business loan from Square - Claim this offer

Square Small Business Loans

  • Customizable offers to match your vision
  • Algorithm creates loan offers based on Square sales
  • Loan offers are invite-only for eligible Square sellers

The next move is yours with a small business loan from Square - Claim this offer

What Makes Square Small Business Loan a Good Option?

As the commerce world grows, most businesses are adopting modern payment methods. Moreover, having a POS system in your retail business ensures sales efficiency.

Square, a point-of-sale system, comes in handy to enable businesses to increase their sales efficiency. In turn, Square’s algorithm picks your sales history and enlists you as an eligible client to receive loans.

So Square is best for small businesses making daily sales and would love to use their sales history to get funding. This is not typical of traditional banks that demand an excellent credit score and collateral to issue funding.

Square-Loans-Comparewise

Here are reasons why Square business funding is a good option.

1.  Loan Costs Transparency

When taking a loan with Square, you know the total amount of money owed beforehand. Moreover, the institution does not charge interest rates on loans but uses a fee strategy.

Moreover, Square automatically deducts a specific percentage from your daily sales. So, the deduction goes up when your daily sales go up and vice versa.

2.  Quick Loan Access

Since merchants incorporate Square into handling business sales, the loan process becomes more manageable. The only documentation you need is your details and tax transcripts for verification.

Also note that you do not make any loan applications, requiring you to fix your credit score and update your business records. Moreover, the loan completion process is purely online hence a convenient way to secure funding.

3.  Flexible Loan Repayments

Unlike typical banks, where you have to make fixed deposits to repay your loan, Square stands out with flexibility. Square calculates loan repayments as a fixed percentage for your daily sales.

The only condition for the loan repayment is that you pay 1/18 of the loan amount every 60 days. There is also no penalty on loan prepayments, partial or complete.

Square Small Business Loans - Comparewise

Pros and Cons of Square Small Business Loan

A Square small business loan review can’t miss the organization’s strengths and drawbacks. Moreover, these pros and cons help determine whether the lender is the best fit for your small business.

That said, here are the pros and cons of Square business loans.

The Pros of Square Loans

1.   Fast Funding

At Square, loan approval times are quick and usually take less than a week. Remember, Square chooses an offer for you stating the maximum amount you can borrow.

The funds usually take up to six business days to reflect in your bank account. And since you complete the application process online, it is much more convenient.

2.   No Personal Guarantees

Business loans taken from Square do not need any collateral. This makes it a convenient loan option for businesses since you do not risk losing personal assets.

At most, Square usually offers unsecured loans up to $75,000. However, a business must sign a blanket lien for security for amounts exceeding this figure.

3.   Automatic Repayments

Square business funding repayment terms are automatic. Moreover, these repayments are based on your business’s daily sales volume.

This allows business owners to fund their inventory without loan repayment worries. Also, note that while the payments are automatic, the rates are fixed and won’t change throughout the repayment period.

4.   Low Loan Requirements

Unlike traditional lenders, Square does not have strict eligibility criteria for business loans. You only have to meet the following requirements:

  • Transact actively through Square.
  • Have a history with its POS system.
  • Own a growing business with sizable new and return clients.

On the other hand, you should avoid having multiple Square accounts, failed debts, and chargebacks. Such instances disqualify and decrease your chances of getting loans.

Square Small Business Loan Reivew - Comparewise

The Cons of Square Loans

1.   Only Available to Square Users

As mentioned earlier, Square loans are only available to clients using its POS system. This action leaves out the public from securing loans through the financial institution.

Moreover, using the POS system in your business does not automatically qualify you for a loan. This is because you must meet the qualification requirements to get an offer.

Also, note that Square chooses clients to offer loans to since no application processes are involved. This makes the service unreliable even to Square users. You cannot rely on it to fund your business operations.

2.   Possibility of Cash Flow Disruption

Like other merchant cash advance lenders, Square offers a lump sum plus fees you must repay over a set term. What you might love about the repayment method is that they automatically deduct a fixed percentage from daily sales made.

However, while the offer seems lucrative, your business may face bad days of low sales. And no matter the market conditions, Square deducts the fixed rate as agreed.

Moreover, this lender can deduct the amount payable from your bank account if you fail to meet the repayment terms. This can prove inconvenient to small businesses since low sales translate to cash flow shortage.

3.   Low Loan Limits

The maximum loan amount you can get from Square is $250,000. While this amount may seem enough to cater to your business’s daily needs, it may not be enough to fund your growth initiatives.

Moreover, unsecured loans have a limit of 75,000, and amounts over this figure need a blanket lien. Any loan amount you take is payable within 18 months, making the loan an expensive option for small businesses.

4.   Not Transparent About Loan Costs

Square doesn’t disclose information about its loan rates to the public or clients beforehand. And since the lender calculates the loan repayment terms using the fee method, you won’t benefit from paying the loan early.

The borrowing fee usually follows a factor multiplier rate of  $1.10 to $1.16. Square reveals this when you accept the loan offer. This might not be helpful for you if you are on the hunt to compare offers from different loan lenders.

Square Small Business Loan Application - Comparewise

Square Small Business Loan Products and Services

Square is geared to offer financial help to small businesses across Canada. It has a list of services to offer, including:

1.  Square Business Loans

According to our Square small business loan review findings, the lender offers sums ranging from $300 to $250,000. These loans are invite-only in that clients do not have the privilege to apply or check how much they can borrow at a time.

The repayment period is 18 months for any amount taken. You pay it on an agreed percentage rate from your daily sales. As mentioned, loans under $75,000 do not need security, whereas any amount exceeding that limit calls for a blanket lien.

2.  Square Cash

Square introduced this service in 2013 to help complete peer-to-peer and business payments. The service facilitates direct bank deposits at an affordable rate of 1.5%.

Moreover, Square introduced $Cashtags to protect businesses’ privacy. Some notable institutions and professionals using Square Cash are Wikipedia ($Wikipedia), The Bay Area’s KQED ($KQED), and Joy Cho ($OhJoy).

However, according to TechDaily, this service is not available to Canadians. It is now rebranded as Cash App and offers extra services like stock and bitcoin trading.

3.  Square’s Point of Sale System

This POS system is popular among many Canadian businesses and others globally. Moreover, it’s free to use and has a simple interface any small business can use.

Besides payment processing, this system can manage inventory, employees, customers, and retail functions. Moreover, businesses using Square POS actively become eligible for loans in the long run.

4.  Square Payroll

This Square service helps small businesses issue payroll to contractors and workers and handle tax filing. Moreover, it has a convenient and programmable mobile app that you can tune to accommodate your employees.

The charges to use Square Payroll in paying employees are $35 per month plus $5 for each worker paid. Workers can also access a payday advance of up to $200 at no cost to the business owner.

Square Small Busines Loan Offer - Comparewise

Square Small Business Loan Product and Service Quality

Square business funding stands out for helping small enterprises secure loans quickly. Moreover, unlike other lenders offering the same service, Square does not consider your credit score.

Square ensures business safety by monitoring transactions and calls you in case of any suspicious activity. The lender also has dispute experts to help business owners solve sales misunderstandings.

Square also enforces two-step verification to keep accounts secure from hackers. Moreover, it issues feedback to help account users create strong passwords.

Square Busines Loans - Comparewise

How to Get Started with Square Small Business Loan

Getting started with Square is simple since you must incorporate its Point-of-Sale system. Moreover, your business has to actively use the POS system to process payments to become eligible for loans.

Here is the procedure to get started with Square.

  1. Go to the website and click on “Get Started.”
  2. Fill in your email, confirm it, and enter a unique password.
  3. Provide your business details like name, estimated annual revenue, and what you intend to use Square for. You will also provide your personal information for verification.
  4. Enter your number and email to receive a download link to the Square POS app. Download the app and start transacting.
Square Business Loan Platform - Comparewise

Alternatives to Square Small Business Loan

After reading this Square small business loan review, you may discover that this lender is not the best fit. Unfortunately, you will have to find another lender that best addresses your business needs.

That said, here are some alternatives to check out.

1.  Sharpshooter Funding

This is a lending platform offering similar services to Square business loans review. Sharpshooter Funding offers POS financing, merchant cash advances, and unsecured loans.

The funding rates start at 9%, depending on the loan your business needs. You need to be operational for 12 months and meet a specific annual sales threshold to qualify for a loan.

2.  Smarter Loans

This financial platform connects Canadians with various loan lenders. Smarter Loans has a pre-application feature, a lenders’ comparison table, a loan calculator, and a credit card issuers’ list.

The lending firms on Smarter Loans are reputable, so you deal with trustworthy lenders. Loans you can get include funding for small businesses with low credit, daily loans, and expansion loans.

Square Business Loan App - Comparewise

Square Small Business Loan Review Conclusion

Small businesses looking to get loans to fund their daily operations will usually want to know what different lenders offer. This Square small business loan review highlights all you need to know about Square Loans.

Moreover, if you find that Square is not the best fit for your financial needs, we have listed two alternatives to check out. It is now up to you to make an informed decision to keep your business operations going.

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FAQs about our Square Small Business Loan Review

How long do you wait after a loan application?

Typically, Square takes three days to approve your loan and three days to send the sum to your account.

Do Square business loans affect a person’s credit score?

Square does not consider your credit score when issuing a loan, so the process has no impact.

Do you need collateral for a $100,000 loan?

Yes, Square states that loans exceeding $75,000 need a blanket lien to be approved.

How do I apply for a Square business loan?

Unfortunately, you cannot apply for a Square business loan. The lender reviews your business profile and invites you to accept an offer.

What is the maximum loan amount one can get?

The maximum small business loan Square offers its clients is $250,000.

How is a Square loan repaid?

Square follows an automatic repayment strategy that deducts a specific percentage of your daily sales.

Can you repay the loan amount before the due date?

Yes, Square allows its clients to make prepayments at no extra cost. Moreover, the loan amount to repay stays fixed.

Can you select an amount less than the one offered?

Yes, the Square loan application interface contains a slider you can use to select the amount you need to borrow.

What happens if you miss a payment?

Square will have to debit the amount from the linked bank account if you are late on a payment.

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Square Small Business Loans

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May 1, 2022
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