Since 2009 square has mainly been known as a point of sale system. However, since the launch of Square Capital last year, the company has issued $100 million in loans to 20,000 small businesses.
Square charges 2.75% per swipe on their payments platform. With Square Capital, there’s no interest applied to the amount its businesses pay back. Instead, it’s paid back as a daily percentage of sales.
With a widely-adopted payments system, analytics and now lending, Square has built a product suite around the small business that goes well beyond its original POS offering.
When Caroline Bell, owner of Cafe Grumpy, was looking to open a sixth location in New York City’s Grand Central Terminal, she took out a cash advance from Square. “It’s great because it’s the first time you can get a cash advance without any paperwork,” said Bell, who runs all her financials through Square. “It’s easy because they already have your bank information and know your business. “Plus you’re getting the cash really quickly, which is nice.” Not only does Square make a profit from the cash advances it loans to clients — Square’s head of corporate development Anton Hanebrink said a borrower might pay back $11,000 over time on a $10,000 cash advance — but the larger its businesses grow, the more sales they can make.