How Square Capital Works
What is Square Capital?
Square Capital provides access to funds to grow your business with no hidden fees or lengthy applications to fill out. Upon approval, funds are deposited as soon as the next business day so you can invest in your business immediately to increase inventory, purchase equipment, hire employees, and more. All loans through Square Capital are issued by Celtic Bank, a Utah-Chartered Industrial Bank, Member FDIC.
What is the repayment length of my loan?
Your loan must be fully repaid within 18 months. Please note that for loans originated on or after June 20, 2018 you can view your loan maturity date in your loan agreement. Learn how to download your loan agreement in Navigating your Square Capital Dashboard.
Is there a minimum payment?
Yes, you’re required to pay at least 1/18 of your initial loan balance every 60 days so that you make consistent repayment progress. For most Square Capital merchants, regular processing volume will cover the minimum payment.
Note: If you just make the minimum payment, you will only pay down half your total owed balance of your loan. You will owe the remaining balance upon the maturity date of your loan and may be debited for that amount.
What is my interest rate?
There are no ongoing interest charges. Instead, the total borrowing cost of your loan is just one fixed fee. Additionally, there are no application, prepayment, or late fees.
What is my fee?
The fee is the total borrowing cost which is the one time flat fee. This flat fee is the difference between your loan balance and the loan amount. If your loan originated on or after June 20, 2018, you can view your fee by referencing your “total borrowing cost” on your loan agreement.
When will I receive the funds?
Upon approval, funds will be deposited as soon as the next business day.
However, please know that the time that it takes for those funds to be available to you will depend on your bank’s processing speed. It can take them up to three business days to process this deposit. For more information about your bank’s processing speed, please contact your bank.
Can I cancel my loan?
Yes. You may cancel your application before a decision is made or before your loan repayment start date, which is two business days after the funds have been deposited. If you’d like to cancel your loan, check out Cancelling your Square Capital Loan for details.
Can I change my loan amount after funds have been deposited?
Once you have selected an offer, we’re unable to change the loan amount. If you’d like to cancel your loan after it has been funded, you can do so before a decision is made on your application or within two business days of funding. Please note, if you cancel your loan, a subsequent offer is not guaranteed.
Can I change my repayment rate after I accept my offer?
You are not able to adjust your repayment rate after you apply for your offer. The repayment rate is tied directly to your loan offer size and is based on a number of factors, including your business’s history with Square, as well as payment processing volume.
Does applying for a Square Capital loan hurt my credit score or require collateral?
Applying for a loan through Square Capital doesn’t affect your credit score. Additionally, we don’t require collateral for business loans of $75,000 or less, and we never require a personal guarantee.
Why do you need my EIN?
The Employer Identification Number (EIN) is a unique nine digit number assigned to your business by the IRS. Square Capital and Celtic Bank use your EIN, ITIN, or Tax ID to verify your business in order to process your request for a loan through Square Capital. If you operate as a sole proprietor, you will enter your SSN.
Where can I get more information on how to locate my EIN?
You can refer to your government issued SS-4 or your recent business tax returns to locate your legal business name and EIN. Take a look at Tips on Verifying your Business Information to learn more!
If I am a Sole Proprietor what do I enter for my business information?
If you are a sole proprietor, you are able to use your name and Social Security number (SSN) in place of your legal business name and EIN.
Who is considered a Business Manager?
A Business Manager is someone who has significant responsibility to control, manage, or direct the business applying for the loan, including but not limited to, a President, Chief Executive Officer, or other senior manager.
If you’re not a Business Manager, you’re required to submit additional identifying information on behalf of the Business Manager, as well as your business role or title.
Who is a Beneficial Owner?
A Beneficial Owner is someone who directly or indirectly owns 25% or more of the business applying for the loan. For example, Bob’s Donut Shop is owned 50% by Bob and 50% by Tasty Donuts, LLC. Tasty Donuts, LLC is owned 50% by Joe and 50% by Mary, both individuals. So, Joe and Mary indirectly each own 25% of Bob’s Donut Shop and would be listed as Beneficial Owners. Bob directly owns 50% of Bob’s Donut Shop and would be listed as another Beneficial Owner.
If you’re not a Beneficial Owner, you’re required to submit additional identifying information on behalf of the Beneficial Owners. Square Capital won’t contact any listed Beneficial Owners or ask them to review your request for a loan.
Why are you asking for additional ownership information?
We’re required by law to collect additional identifying information regarding the control and ownership of businesses that apply for loans through Square Capital.
Do I have to inform a Business Manager or Beneficial Owner about my loan application?
No, a Business Manager and/or Beneficial Owner doesn’t need to review or sign your application.
Square Capital Collateral
Is collateral required to obtain a loan through Square Capital?
We do not require collateral for loan amounts of $75,000 or less. For loans amounts over $75,000, we take a security interest in your business assets and file a UCC statement with the Secretary of State where your business is organized.
What is a UCC filing?
A UCC-1 filing is a publicly available record that provides notice of a security interest in certain property of a debtor. UCC statements are typically filed with the Secretary of State where a business debtor is organized. UCC statements can be filed for several reasons. For example, UCC statements are sometimes filed when a lender makes a secured loan to a business.
Square Capital filed a UCC statement on my business. How do I get the filing released?
After you have finished paying off your loan, you can reach out to us with a request to remove the UCC filing. Please note that we only file UCC statements on loan amounts above $75,000.
I was asked about a UCC lien but I don’t recognize the secured party?
Sometimes, institutions will use a third-party to file, track, and maintain lien positions as the registered agent of the institution. Corporation Services Company is a common third-party representative. If you are unsure of what institution the third party is acting on behalf of, best practice is to reach out directly to the third party.
Is a personal guarantee required?
Square Capital does not ask for a personal guarantee on your loan.
For any other questions or additional help, please contact us.