Square Capital Merchant Cash Advance: Loans, Funding, and Credit Explained

Square Capital Merchant Cash Advance offers a unique funding option for businesses, providing access to capital through a merchant cash advance. This type of funding is based on a business's future credit card sales, not its credit score.

A merchant cash advance is essentially a loan, but it's not considered debt by the IRS, as it's not a traditional loan. Instead, it's a purchase of future receivables.

Square Capital Merchant Cash Advance allows businesses to receive funding quickly, often within 24 hours, which can be a lifesaver in times of cash flow emergencies.

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Square Capital's merchant cash advance is invite-only, meaning you'll be notified when your account becomes eligible. Eligibility is based on your Square sales volume.

You don't need a minimum credit score or time in business to qualify, which is a rare exception in the business lending industry. This makes it an accessible option for younger businesses, startups, and enterprises with limited credit history.

With no minimum credit score or time in business required, it's a great choice for businesses that need quick capital, such as those with occasional cash flow disruptions or seasonal drops in revenue.

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Square Capital loans are invite-only, so you'll need to wait for an invitation to apply.

You don't need a minimum credit score or time in business to qualify, which is a rare find in the business lending industry.

Square Capital loans are easily accessible and convenient, with no need to fill out an application, provide documentation, or speak to a representative.

You can apply for a Square Capital loan if you use Square to process payments and meet their sales volume requirements.

Businesses with occasional cash flow disruptions or seasonal drops in revenue can benefit from a merchant cash advance, which can help fill in the gap where your own funds fall short.

Square Capital loans don't require collateral or a personal guarantee, so neither your business nor personal assets are at risk.

You can apply for a Square Capital loan if you have a Square POS account and meet their sales volume requirements.

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So, you're wondering what an Square Capital Merchant Cash Advance is? It's a type of financing that allows businesses to receive cash advances in exchange for a percentage of their future credit card sales.

Square Capital is a financing option designed for businesses that process payments through the Square platform. This means that if you're already using Square to manage your payments, you may be eligible for a Square Capital Merchant Cash Advance.

A merchant cash advance is essentially a loan that's repaid through a percentage of your daily credit card sales. This can be a flexible option for businesses that need quick access to cash, but may not qualify for traditional loans.

The amount you can borrow through Square Capital varies, but it's typically based on a percentage of your daily credit card sales. For example, if you're processing $1,000 in credit card sales per day, you may be eligible for a cash advance of $500 to $1,000.

You'll need to meet certain requirements to qualify for a Square Capital Merchant Cash Advance, including having a minimum amount of credit card sales and a certain level of payment processing activity through Square.

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Applying for a Square Capital merchant cash advance is a straightforward process that can be completed in minutes. You'll need to upload your business documents with zero risk of being turned down.

The application process is designed to be efficient, allowing you to move through it quickly and easily. You'll have the opportunity to compare your offers with expert advice from the Square Capital team and select the best one for your specific circumstances.

One of the biggest benefits of a merchant cash advance is the resolution of short-term cash flow issues. This type of funding can help you cover unexpected costs or purchase inventory.

Some of the notable benefits of a merchant cash advance include:

Merchant cash advances are known for being some of the fastest financing solutions available, with funding delivered almost immediately. This makes them especially popular among businesses with seasonal lulls or frequent cash flow disruptions.

Merchant cash advances don't have interest rates; instead, they have factor rates, which are decimal numbers that work similarly but with some unique differences.

Factor rates range from 1.1 to 1.8 on average, with lower numbers given to more trustworthy borrowers and higher rates given to businesses with less revenue and more risk.

Lenders and brokers may charge additional fees for connecting clients with funding sources, and these fees can vary from situation to situation.

These fees are on top of the cost of the financing, which is calculated by multiplying the funding amount by the factor rate, and can be a significant added cost for businesses.

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Merchant cash advances don't have interest rates, but rather factor rates, which are decimal numbers that determine the cost of capital.

Factor rates range from 1.1 to 1.8 on average, with lower numbers given to the most trustworthy borrowers and higher rates given to businesses with less revenue and more risk.

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A factor rate of 1.3, for example, means a business will pay back $390,000 ($300,000 x 1.3) to borrow $300,000.

Rising interest rates are making merchant cash advances more attractive to businesses, especially those who can't get loans from banks.

As interest rates continue to rise, businesses are looking for alternative sources of financing, and merchant cash advances can be a quick and flexible way to gain access to funds.

Banks and other financing institutions are currently charging higher interest rates, making merchant cash advances a more viable option for businesses.

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Hidden fees or additional costs can sneak up on you if you're not careful. Lenders and brokers may charge additional fees for connecting their clients with funding sources, which can vary from situation to situation.

Be sure to ask about these fees if you're curious. Lenders and brokers may charge additional fees for connecting their clients with funding sources.

Merchant cash advances can be subordinated, meaning they can fund at the second position and preserve senior financing (outstanding loans).

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Square Capital offers a merchant cash advance that's cheaper than a traditional merchant cash advance, with a factor rate of 1.16 being the highest possible. This is a significant advantage, especially for businesses that need quick access to capital.

The application process is also incredibly streamlined, with no need to fill out lengthy forms or provide extensive documentation. You can even review your offers and pick one without having to speak to a representative.

Here are some key benefits of using Square Capital's merchant cash advance:

These benefits make Square Capital's merchant cash advance an attractive option for businesses that need quick access to capital without the hassle of traditional financing.

With a Square Capital merchant cash advance, you can access up to $250,000 in as little as a few hours. This funding can be used for a variety of business needs.

You can use the funds to cover materials and supplies, pay payroll, purchase equipment and tools, or cover operating expenses like rent, gas, and asset maintenance. Revenue-driving opportunities are also a great way to use the funds.

Some examples of how businesses have used merchant cash advances include covering a slow month's payroll, purchasing materials and equipment for a new contract, or bridging a gap in cash flow due to a lost client.

You can use the funds to cover a wide range of business expenses, including:

After getting funded, Square will begin deducting a fixed percentage of your daily card sales as repayment on the specified Repayment Start Date.

Your loan agreement with Square will outline the repayment terms, so be sure to review it carefully.

Square will deduct the repayment from your daily card sales, so it's essential to keep an eye on your sales and repayment progress to ensure you're on track to fulfill the requirement.

You can easily check your repayment progress in the Square Account dashboard, which is a great tool to stay on top of your finances.

If you have extra cash, you can make a manual payment or pay off your entire loan at any time, which can give you peace of mind and reduce your stress levels.

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However, keep in mind that manual payments won't save you on interest, so it's essential to plan ahead and make timely repayments.

Borrowers who paid off 60%-80% of their loan may become eligible for an additional loan offer, but this is invite-only, so there's no guarantee that you'll receive additional offers.

If you do receive an offer, the new loan funds will pay off the remaining balance of the current loan, which can be a great opportunity to consolidate your debt and simplify your finances.

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You can apply for a Square Capital merchant cash advance in just a few steps. First, gather the required documents, which may include financial statements, a copy of your business license, and proof of your business's credit card sales.

Square will verify your business's financial information through Square Financial Services, Inc., a Utah-Chartered Industrial Bank, Member FDIC. You may be asked to upload additional documentation, like proof of your employer identification number (EIN).

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The repayment structure for Square business loans is the same as a merchant cash advance, with payments deducted from your daily debit and credit card sales processed through Square. The holdback rate for a Square business loan usually falls between 9% and 13%.

You can expect to receive your loan funds within 72 hours if approved. Square disburses the loan funds to your Square Checking Account or linked business bank account.

Square's business loan product is invite-only, meaning the company notifies you when your account becomes eligible. You only need a Square POS account since eligibility is based almost entirely on your Square sales volume.

Here's a quick rundown of the application process:

You can access up to $250,000 in as little as a few hours through a merchant cash advance, but above that amount may take a bit more time. Most revenue-based financing funds within 1-3 days.

Merchant cash advances rely primarily on a business's profitability to determine eligibility, not credit score. Having good credit makes it easier and cheaper to secure financing, but it's still possible to get a merchant cash advance with bad credit.

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A merchant cash advance is not a loan, but rather a type of financing where a business receives an immediate lump sum of cash in exchange for a percentage of their future credit card sales. This type of financing has become increasingly popular in recent years as businesses have struggled to secure traditional forms of financing.

Here are some key differences between a merchant cash advance and a small business loan:

A merchant cash advance can be a good option for businesses that need capital quickly, but traditional loans aren't a good fit. This can be due to a new business with not a ton of credit history built up, or a business that can't wait for a traditional loan approval process.

A loan is a type of financing where you borrow a specific amount of money from a lender, typically with the promise to repay it with interest over a set period of time.

In contrast, a credit is not a type of financing but rather a measure of your creditworthiness, which determines how much money you can borrow and at what interest rate.

Loans are typically used for specific purposes, such as buying a car or a house, while credits are more flexible and can be used for a variety of expenses.

Your credit score is a key factor in determining the interest rate you'll pay on a loan, with higher scores often resulting in lower interest rates.

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Square Loans offer borrowing amounts between $300 and $250,000.

The repayment structure for Square Loans follows that of a merchant cash advance, where a percentage of daily card sales gets repaid as the repayment amount.

This repayment amount only comes from sales on the Square payment system.

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Having bad credit doesn't necessarily mean you can't get a merchant cash advance. Many online lenders don't have a minimum credit score requirement, and they'll consider your business's revenue and sales history instead.

Some lenders, like traditional banks or credit unions, may still require a good credit score. But online lenders are more likely to look at your overall business credentials, including your revenue, growth prospects, and time in business.

If you're a new business or startup, a merchant cash advance can be a good option. You can access capital quickly, even if you don't have a lot of credit history or assets to use as collateral.

However, it's essential to note that you'll need to forfeit a percentage of your daily credit card sales towards debt repayment. This means you'll need to have a steady stream of sales to qualify for and repay the loan.

To increase your chances of getting a merchant cash advance, consider the following:

On the other hand, Square Capital won't lend to businesses that:

You can access up to $250,000 in as little as a few hours through a merchant cash advance, but above that amount may take a bit more time. Most revenue-based financing funds within 1-3 days.

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Merchant cash advances rely primarily on a business's profitability to determine eligibility, so you won't need a good credit score to qualify. This is a major advantage over traditional loans.

Merchant cash advances are designed to be short-term funding solutions, with most being repaid within a year or less. In contrast, business loans can have repayment terms as long as 25 years.

The laws governing merchant cash advances and loans are significantly different, with merchant cash advances being essentially a purchase of a percentage of your future sales at a discount. This is a key distinction to understand when comparing funding options.

Merchant cash advances typically have much higher APRs than traditional business loans, but they're designed to be repaid quickly, which means you'll spend less time in debt. This can be a more manageable option for some businesses.

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Square Capital's merchant cash advance has several benefits that make it an attractive option for businesses. It's your most accessible and affordable financing option if you use Square to process payments.

You don't have to fill out an application, provide documentation, or speak to a representative. The process is incredibly convenient, and no other business lender can offer this level of ease.

The loan does not require collateral or a personal guarantee, so neither your business nor personal assets are at risk. Square might put a lien on business assets for loans over $75,000.

Square Capital is much cheaper than a typical merchant cash advance. To clarify, a regular merchant cash advance might carry a factor rate of 1.5. With Square Capital, the highest possible factor rate is 1.16.

Here are some key pros and cons of Square Capital's merchant cash advance: