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Taking Banks Out of the Money Lending Process

Posted on 6.01.2014

Obtaining a loan from a bank is a long, drawn out and dreadful process for many reasons, chief among them is having to pay the loan back as scheduled.

Worrying over whether or not they’ll be able to make the sheduled payments each month is a serious concern for many companies in today’s volatile market. However, with the rollout of a new money lending program, one company hopes to take banks out of the money lending process completely.

Square, most commonly known for its credit card reader (Square Reader) which plugs into smartphones and tablets, has recently announced the launch of a new money lending program called Square Capital. To obtain a cash advance from Square Capital there is no application process, however businesses must have an established payment history with Square via Square Reader.

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For companies, paying back the advance they received is different than paying back a loan from a bank. Instead of having a fixed monthly amount, businesses will pay Square a set percentage on all credit card sales. While there is no set time limit for how long companies can take to pay their advance off, Square expects most companies to pay it back in 10 months. However, no matter how long it takes to pay back Square, the amount they owe will never change.

"We're really grateful for Square Capital, which helped us add a sixth coffee shop location and expand our Roastery," said New York–based Cafe Grumpy owner Caroline Bell. "We got our money quickly and the ease of automatic payments allowed us to focus our time and energy on serving great coffee to our customers. Square Capital helps keep independent businesses like ours running and growing.”

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