Square has announced that it will enter the small business lending business. Available to Square Register merchants, Square will provide short term business loans based on cash flow and sales volume.
There is no application process and monies can be available as soon as the next day. Square expects payment to be made in roughly 10 months and says that there will be no penalty if repayment terms take longer.
Repayment is taken as a fixed percentage of sales plus a fixed fee, automatically, presumably as a way to guarantee repayment.
It is reported that the service has been in pilot with thousands of merchants with millions of dollars advanced. Eighty-five percent of merchants said they would recommend the service.