This article is for informational purposes only and does not constitute legal, accounting, or tax advice. The information contained herein is subject to change and may vary from time to time in your region. For specific advice applicable to your business, please contact a professional.
If you’re running a new business venture or considering a business loan for the first time in a while, you might be feeling slightly overwhelmed. Between the big banks, smaller ‘non-bank’ lenders and other finance options vying for your attention, it can be tough to determine the loan option best suited for your business.
Square Loans is new to the Australian business lending sector, but brings the global experience and track record of having lent to over 435,000 independent businesses wanting to grow in the US. The Square Loans model is unique, and it may be one that’s just right for what you need.
Unlike a standard business loan from a bank, Square offers a flexible and automatic repayment plan that syncs intelligently with your card sales – which means you pay back more when sales are strong, and less when it’s quieter. And unlike with a bank loan, there’s no traditional interest rate to pay – just one simple, flat fee.
As with any financial product, there’s no such thing as a one-size-fits-all business loan, and you should carefully consider all options before you make a decision. But if you’re feeling like a standard business loan from your bank is your best or only option, there are a few things you should take into account.
A business loan from the bank may need to be secured
Don’t be surprised if the business loans offered to you by the banks are secured – meaning you may need to put your other assets up as collateral. If you have other businesses or real estate assets you’re willing to put at risk, this might not worry you. With your attached assets in the mix, the lender takes on less risk and greater certainty that you’ll be able to service the loan long-term. Secured loans can be a way for you to lock in a standard bank loan even if you don’t have the best credit score. It all depends on the individual circumstances of your business and how flexible the bank is willing to be.
Banks won’t adjust to suit your circumstances
Generally speaking, once you enter into a business loan agreement with a bank, your terms and repayments are set and any adjustments are unlikely. Depending on the length of the loan term, that can be a long time to be locked into a financial agreement. Of course, refinancing options are always available, but these too can come at a cost.
Square Loans was built on the knowledge that running a business involves constant ebbs and flows: some months sales are soaring and some months the unexpected can arise, causing a dip or disruption. We don’t have to look too far back in time to see evidence of this across nearly every industry. That’s why with Square Loans, you repay your loan amount flexibly and automatically, as a percentage of your card sales using Square.
Some banks might make you jump through hoops
In Australia, all banks are highly regulated, and rightly so. They also service a very large customer base, made up of individuals, businesses and property owners. All this means that there can often be reams of paperwork and checks involved when you put a bank loan application in. And just because you use a bank currently for your business or personal banking doesn’t mean you get to jump the queue.
With Square Loans, we’ve flipped the script and taken all the hard work out of applying. If you are eligible to apply for a business loan, we’ll get in touch with you proactively, either by a short email or a notification in your Square Dashboard. If you want to go ahead, there will be some basic information to provide, and then, voila, we’ll be ready to assess your eligibility for the loan amount you’ve chosen and provide you with a yes or no, and the funds, within a few business days. Better yet, the process of applying for a Loan through Square will not impact your credit score in any way.