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Buying new equipment, expanding to a new space, and hiring more employees for your business all pose exciting and often expensive challenges. That’s why we’re launching Square Loans, a lending program designed to make it quick and easy for independent, eligible businesses to get access to the capital they need to grow.
Small businesses in Australia have historically been faced with massive challenges when it comes to accessing formal forms of funding – often requiring piles of paperwork, providing years of financial information and putting up personal guarantees that can be covered in red tape.
Square research from January 2020 surveying 500 SMB businesses in Australia showed that only one in four small businesses was using funding accessed through a financial institution, such as a business bank loan, but more than half of Australian business owners have relied on private sources of funding, such as personal credit cards or borrowing from friends and family. The research also found that business owners were even less likely to have accessed formal funding, and more likely to have used personal finances, if they were women or aged under 40 years.
How does Square Loans work?
Square Loans is here to help. Available to current and eligible Square customers, Square determines your business’s eligibility for a small business loan and provides a customised offer (amount you can borrow) based on the card sales you process with Square. Then you choose your loan size (within the offered range) and apply with just a few clicks. You then repay the loan automatically as a percentage of your daily card sales through Square.
By using historical transaction data, Square Loans presents eligible businesses with an email and notification of their offer in their Square dashboard. There is a simple and straightforward application process, with no paperwork needed. Approved businesses will get their money as soon as the next business day, and have just one clear upfront loan fee which will automatically be paid back as a set percentage of daily card sales on Square — so they pay more back when sales are strong and less if things slow down.
Unlike the structure of traditional loans, the cost to the seller never changes, regardless of how long it takes them to repay Square. This is because your Square Loan will come with an upfront, fixed fee instead of an interest rate ongoing, so you’ll always know how much you will repay.
Jordan Walker, owner of Dexterity Salon in Ballarat, Victoria, was part of an early access program for Square business loans in Australia, and used the funds to invest in expansion and to capitalise on a successful COVID-19 pivot.
“Before COVID-19, we were growing strongly and were ready to expand our physical foot-print and double our salon space, while bringing on more staff and apprentices,” says Jordan. “However, we were forced to put these growth plans on ice. Instead, we pivoted and opened a successful retail channel that allowed us to bring in some revenue while our doors were shut.”
“Our Square Loan helped us to buy inventory to keep money coming through the door, and has enabled us to now start to expand our business, as we had originally planned,” Walker said. “When COVID-19 restrictions and other factors are moving and changing so quickly, we were lucky that our Square Loan was so quick and simple. We didn’t have time to provide reams and reams of paperwork.”
Since the initial launch of Square’s loan product in the US, Square has facilitated more than USD$8 billion in financing to more than 435,000 small businesses*.
To find out if your business is eligible for Square Loans and to learn more, visit the Square website.
*Includes U.S. MCAs and business loans from May 2014 to December 2020.
Loans are offered by Square AU Pty Ltd (ABN 38 167 106 176). All loans are issued by Square AU Pty Ltd. Valid Australian bank account is required. Actual fee depends upon payment card processing history, loan amount and other eligibility factors. A minimum payment of 1/18th of the initial loan balance is required every 60 days and full loan repayment is required within 18 months. Loan eligibility is not guaranteed. Eligibility criteria include consistent and continuous payment card processing through Square. All loans subject to credit approval. Terms and conditions apply.