May 15, 2015
Square recently secured additional outside investments to expand its popular small business financing program, Square Capital. With Square Capital’s first investor, Victory Park Capital, tripling its original investment, and with new money from investors including Colchis Capital, Square will be able to advance hundreds of millions of dollars this year to a wide array of businesses, many of whom have been neglected by traditional financial institutions. Using data-driven insights, Square Capital has extended more than $100M to over 20,000 independent businesses since launching last year.
Last month alone, Square advanced nearly $25 million in capital. The program helps businesses grow by giving them access to funds in a quick and simple way - with use cases such as enabling Cascade Cab in Oregon to start a taxi service, helping Hobbie's Cafe in Kentucky to build a new sandwich bar, and funding RubDowns Day Spa in Pueblo, Colorado, to become a full-service salon. More than 80% of merchants who have completed their first Square Capital advance have renewed for a second round of capital to make additional investments in their business.
Square proactively reaches out to businesses eligible for financing, using unique advantages derived from its large and growing core payments business - including sophisticated risk modeling and machine learning - making the service faster, more flexible and transparent, and available to more customers. The company continues to offer other new financial services to businesses, including a Chargeback Protection program to help them with disputed purchases, making traditionally slow and painful processes simple and affordable.
With Square Capital, businesses sell a specific amount of their future card sales to Square and in return receive a lump sum payment. Businesses automatically pay Square as a set percentage of daily card sales, so they pay more when sales are strong and less if things slow down. The total cost to the seller never changes, regardless of how long it takes to pay Square.
Recent initiatives show that Square has been focusing more on business oriented services and has been making prominent progress on that front. Earlier, Square had acquired a startup called Caviar which connects restaurants with an outsourced delivery service. Such examples show that Square has been looking aggressively to target the emerging areas of its business.