As mentioned above, Square Capital is a little unpredictable when it comes to things like terms and fees, because your loan is based on your merchant account and your annual revenue.
However, if you’re lending between $500 and $250,000 from Square, you can expect to be asked to pay your money back within 18 months, and there won’t be any origination fees to worry about.
Instead, Square makes money from its business loans by asking you to pay a one-time fee called a “factor rate,” which you pay back gradually over the life of your loan. You won’t be able to save some extra cash by paying your loan off early this way – but that’s not too much of a problem for some companies. For short-term loans, the factor rate option is an excellent way to manage your lending.
Although there’s no specific “term” on the loans that you get with Square Capital, you will have to pay the full amount within 18 months
According to research by the Wall Street Journal, the “factor rates” which Square offers are usually between 1.10 and 1.16 depending on your merchant background and your loan amount. This means that you’ll be paying up to $1.16 back for every dollar you borrow. It’s best to check on your repayment amount before you commit to your loan with Square, just in case. You don’t want to end up with a business line of credit that’s going to cost you more than you think.
Additionally, you will have the option of making additional payments and getting rid of your loan at any time. This takes the credit off your mind, but it doesn’t deliver any other major benefits. You also don’t need to offer any collateral for a loan of up to $75,000 with Square Capital – but you will be required to use a blanket lien if you’re borrowing more than that.
In general, Square will set up your payment rate so that you should have all of the money paid back within a year, but you can adjust your repayments if necessary.
Some companies will love Square Capital‘s funding and repayment model. It means that you don’t have to worry as much about interest, because there’s just one blanket fee. Additionally, you’re not going to have to keep track of your repayments, because Square will automatically take them from the sales you make. Square takes an alternative route to the rules and restrictions of traditional loans, giving businesses the power to access cash for company growth without worrying too much about their repayment amount, or personal credit score.
Another significant benefit of Square Capital‘s repayment plan is the fact that it adjusts your payments according to your incoming cash each month. If you have a slow month and you don’t earn a lot, Square will adjust your payments based on a percentage-based plan and move some of the cash you owe over to another higher-paying month.
You can even set up prepayment strategy according to your business needs, so you can pay off the debt on your Square account at a time and pace that suits you. As flexible lending goes, Square point of sale is one of the best options for those short term loans that you may need as your company grows.
Square Capital Review: Flexibility
If you’re concerned that you don’t know enough about Square Capital to jump straight into a new loan with the company, you can check out the Square Capital Support Center to find out more. However, there’s not a lot of documentation available on the Square website to get you started. If you don’t know much about things like factor rates and merchant cash advance strategies already, then you might feel a bit confused. The information on Square’s website is so limited that you may payday loans in Ashland City need to track down assistance on forums and social media pages instead.