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Square Enters Lending Game with ‘Easy-to-Understand’ Square Capital

Cafe Grumpy used Square Capital to Help open its Grand Central Station shop. Photo by Alan Gastelum

Cafe Grumpy used Square Capital to Help open its Grand Central Station shop. Photo by Alan Gastelum

San Francisco-based Square today launched Square Capital, a small business loan program that they say gives retailers like coffee shops access to funds in “a way that’s easy to understand.”

Square says the program involves no application process, and businesses can get money as soon as the next business day. Square then takes a set percentage of daily card sales from its customers using the Square POS system. Word of the lending program leaked earlier this year, and Time reports that Square has already loaned tens of millions of dollars to small businesses during piloting.

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One of those is New York roaster/retailer Cafe Grumpy, which recently used the program to help open its sixth location, inside Grand Central Station.

“We’re really grateful for Square Capital, which helped us add a sixth coffee shop location and expand our Roastery,” Cafe Grumpy owner Caroline Bell said in a testimonial on behalf of Square. “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.”

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Here’s more from Square on how the program works for borrowers:

Square creates unique offers for businesses with the expectation that sellers will complete their advance in approximately 10 months, although there is no set time frame. The cost to the seller never changes, regardless of how long it takes to pay Square.

Square says the fact that borrows are using their POS system, they have access to real-time sales data to better understand a company’s growth potential.

Square Capital is the second major program introduced by the company in recent weeks, after what many tech analysts suggested was an admission of failure when it ditched its “Wallet” app. In its stead, Square launched its new pay-ahead app, Order.