Square Capital Review: Learn All You Need to About Small Business Loans

Square Capital is owned by Square Inc. and was first launched in 2014. It focuses on providing unsecured business loans to small companies.

Square capital review
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    Written by Anthony Edmundson, updated on 10/20/2021
    Financially Reviewed by Gordon Scott, CMT, on 6/1/2021

    Before moving into the financial market, Square was already well-known for its innovative online and mobile payment solutions, as well as its range of eCommerce tech. With so much experience processing online sales, there are understandably a lot of synergies to be found with the business lending world too. Since it was founded, Square Capital has disbursed more than $9 billion in funds to more than 460,000 businesses. 

    What Is Square Capital?

    Square dipped its toes into the lending waters back in 2014 and focuses solely on merchant cash advance loans. With this type of lending, you’ll be borrowing against a percentage of your future credit and debit card sales. In this case, the loan, plus interest, will be deducted directly from all sales that go via your Square sales processing software. 

    On the plus side, this makes approvals much easier to get and a lot faster to process than other platforms. That’s because Square already has a wealth of information about your business history so they already have a good idea of how capable you are of repaying your loan. 

    Like other types of merchant cash advances, rates can be high. They start from a factor rate of 1.10, which is essentially charged as a flat fee. So, if you get a loan of $1,000, you’d times this by 1.10, giving you a total loan payment of $1,100.

    Advantages and Disadvantages of a Square Capital Business Loan

    Square Capital Advantages

    • Easy Application Process: The company will offer you a loan option in a proactive manner. You don’t really need to search for the different types of loans and then choose from them. Additionally, the application process can be conducted online, making it much more convenient for your business.
    • Quick Disbursement: This advantage arises because you will be already registered as a merchant. This will cut down on the time taken to hand out the loan to your business. In general, merchant cash advance tend to be handed out much faster than other types of loans, and this is certainly true in this case, usually the next business day.
    • Clear Information: The information provided by the company on its website is presented very clearly. The terms of the loan will also be shared with you after you apply for it. This is a big advantage as you aren’t likely to face any major challenges in terms of informational transparency.
    • No Prepayment Fees: If you choose to pay back the loan before the end of its term, there are no prepayment fees. This is a major advantage because traditional loans tend to have prepayment fees associated with them, putting your business in a dilemma whether to prepay or not.
    • No Late Fees: In addition, there are no late fees either. The entire payback mechanism is based on a fixed fee to be paid out of your debit/credit card sales. Even if you’re not able to pay back your loan as per the original schedule, there are no late fees.
    • Automatic Payback: The payback process is fully automated because it’s directly linked to your point of sale system. This means that you do not have to worry about writing checks or visiting the company’s office. An automated process makes the entire borrowing experience much smoother.

    Square Capital Disadvantages

    • High APRs: The annual percentage rate (APR) that’s applicable to this financing is relatively higher compared to traditional business loans. This is because the terms tend to be shorter. A short term means the interest and fees aren’t too spread out and may end up costing you more.
    • Less Responsive Support: Another key disadvantage is that this lender’s customer service isn’t very easily accessible and responsive. The company has a reputation for not responding to customer requests in a timely manner. This means that your queries may take some time to resolve.
    • You must use Square’s Payment platform - If you’re not using Square’s software to process your credit and debit card payments, you won’t be able to apply for a loan.
    • Daily payments can be tough to manage - When a loan eats into your daily payments, it can cause cash flow issues. Make sure you have cash set aside to cover bad days.

    Square Capital Loan Features

    Gaining Square Capital funding is an incredibly simple premise, as the lender only offers one type of loan; a merchant cash advance. The simplistic nature here means you don’t have to provide much documentation, and applications are quick and you can get funded in just a few days. 

    However, you should bear in mind that you don’t actually apply directly for a loan here. You have to wait to be invited and will receive notification of your pre-approval via your Square account. However, if you’re interested in taking a loan, you might want to get in touch with customer services and express interest to see if this reduces your wait. 

    Merchant Cash Advance

    Square will have a full record of all of your debit and credit card transactions over your time using the platform. It’ll then use this information to determine how much you can borrow. You’ll pay back the loan, plus your factor rate charges, over the course of one to 18 months. 

    Loan Type

    Merchant cash advance

    Term length

    1 - 18 months

    Repayment period

    Daily deductions from credit and debit card sales

    APR range

    Factor rates between 1.10 - 1.16

    Min - Max amount

    $300 - $100,000

    Square Capital Interest Rates and Fees

    The fee and charge process at Square is incredibly streamlined and you’ll mostly be covered by the flat fee charged within your factor rate. There are no origination, prepayment, or maintenance fees to pay, making it very easy to understand how much you'll actually be charged each day. 

    There are no late fees either because everything is deducted from your credit and debit card sales. So, if you have a good day of sales, you’ll pay more, while if you make fewer transactions you’ll pay less. 

    You should note that all loans under $75,000 are unsecured, but for any amount above this, you’ll need to sign a blanket lien. This means Square has the right to seize any of your business assets to cover the debt, so take care when borrowing large amounts. 

    Merchant Cash Advance

    Loan type

    Merchant cash advance

    Origination fees


    Prepayment fees


    Late payment fees


    Maintenance fees


    Interest rates

    Factor rate between 1.10 and 1.16

    How to Qualify for a Square Capital Loan?

    To access Square Capital funding, you’ll first and foremost need to be a user of the Square payments platform, and be processing the majority of your sales using its payments system. Plus, you’ll be rejected if you have any unusual activity on your account, such as failed debts and multiple chargebacks, or if your sales have dipped recently. In addition, if you already have a merchant cash advance with Square that’s in poor standing, you won’t be eligible. 

    Outside of these requirements, other criteria aren’t strict at all. There are no minimum standards for time in business and your credit score won’t play a part in the loan decision. All you need is a combination of strong sales via the Square platform, the ability to prove a mix of new and repeat customers, and show that you make at least $10,000 per year. 


    Merchant cash advance

    Minimum credit score

    No minimum required

    Minimum annual revenue


    Minimum time in business

    No minimum required

    The  Application Process

    The application process works quite differently from other traditional and online lenders. You’ll usually be invited to apply via your Square sales platform dashboard, often after you’ve shown evidence of strong sales performance. Although you can express interest by getting in touch with the platform’s customer service team if you can’t wait for an invite. 

    You may be given the opportunity to take a survey via your online account too. Answering a few questions will quickly determine your eligibility, opening up the application process. Make sure you keep an eye out for this option in your dashboard. 

    Once you're able to apply, the process is incredibly quick, and shouldn’t take more than a few minutes, and funding is often in your account the same day or the next business day.

    While your application is primarily based on your sales data, in certain circumstances you might be asked to provide additional documentation, so it’s useful to have some on hand. Square might ask for:

    • Business tax returns
    • Personal tax returns
    • Your business license
    • Examples of invoices to show sales are genuine
    • Your articles of incorporation

    How Does Square Capital Determine the Loan Amount? 

    The loan decision is almost entirely based on your recorded sales through the Square platform. In simple terms, the higher your sales, the more you can borrow. Your factor rate is usually determined by the consistency of sales. If you have a lot of peaks and troughs in your credit and debit card sales, you might be paying a higher rate as you present a greater lending risk, though evidence of strong daily sales will bring this figure down.

    As well as having one of the most unique application processes among online lenders, Square Capital was actually created by Twitter founder Jack Dorsey. Through its many business endeavors, the market capitalization of Square Inc. is around  $100 billion.

    Customer Support

    It can sometimes be a little tough to get in touch with Square Capital, and users have expressed confusion over when they might receive a loan offer. You can get in touch over the phone, via email, and on social media using Facebook messenger, but it’s difficult to find these options via the website and new customers might struggle to find the right answers.

    That being said, the platform has been investing in its customer service team in recent years, and we’re definitely seeing improvements. The FAQ page has been expanded, and you can now access the Square seller community forum where customer service agents regularly respond to queries made via posts. 

    As a result of these innovations, and improvements to regular contact methods, we’re starting to see an increase in positive responses to customer service. 

    Square Capital Loan Reviews

    The steady improvements to the loan offering and customer service options have seen an increase in Square Capital’s score on Trustpilot, and it now sits at a very healthy 4.7 stars out of 5 from almost 1,200 reviews. 

    Users are particularly impressed by the ease and expediency of the application process, and just how quickly they were able to access funding. Others are pleased to find there are no hidden fees, and that all charges are laid out very clearly from the start of a loan.

    However, in some instances, customers have expressed concerns over inconsistent offers, and aren’t sure when they may or may not be eligible to apply. Square customer service is usually happy to address these questions and explain your circumstances to you if you get in touch, though. 

    In addition, some customers have complained about rejections due to being flagged for unusual account behavior. However, this is most likely due to the fact that Square likes to see consistency in payments, and companies that have fluctuating sales could see higher levels of rejection. 

    Positive Reviews

    Negative Reviews

    Fast application process

    Slow customer service on occasion

    Quick funding

    Unclear eligibility process

    Easy to understand loans

    Rejections for inconsistent sales

    Final Thoughts

    If you’re after a small business loan process that’s easy to understand, comes with low fees, and has an incredibly simple application process, then you’ve come to the right place. Square Capital might just be one of the most convenient lenders we’ve encountered, and it's incredibly easy to manage your loan. 

    The biggest drawback comes from the requirement to use the Square payment processing platform and the fact that it’s Square Capital itself that will decide which customers will be invited to apply or when they might be offered extensions. It can be difficult to get in touch or know when you’ll be deemed eligible, but this is an area the platform is improving at all of the time.