Square Loans Review: Pros, Cons & How To Apply
Key Takeaways:
- 💳 Square Loans are designed for businesses using Square’s payment system.
- 💵 Loan amounts range from $100 to $500,000.
- 💼 Repayment is tied to a percentage of daily sales and credit card transactions processed via Square.
- 📅 Square loans carry one fixed fee instead of interest, with a minimum payment schedule and maturity date set in each loan offer.
- 🔄 You can receive new loan offers over time, based on your Square account activity
- 📋 No hard credit check to apply, but merchant sales volume is key
- ⚠️ Limited to businesses using Square for payments
- 📊 Fast and flexible loan process but may not be suitable for all businesses
- 📑 Our rating for Square Loans is a 4 out of 5.
To learn more about Square Loans and how they work, please continue reading:
Square, a point-of-sale payment service like PayPal or Stripe, offers small business loans to merchants with a Square account. At first, Square Capital’s product might not seem unique. Square reports more than $26.5 billion extended to over 900,000 businesses, which shows the program’s scale.
Like many other popular business financing products, Square Capital is geared towards a particular type of business. Thus, you must determine if you belong to this group before pursuing Square Capital instead of other options.
In this guide, we’ll answer the following questions and more:
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What are Square Loans?
Square is a popular provider of mobile point-of-sale (POS) systems that allow merchants and other businesses to process debit and credit card transactions and sales. The company’s POS units include chip readers and other modern technology to handle payments.
Square has offered business financing since at least 2013; its funding totals count from October 2013. It initially rolled out a merchant cash advance product. It then formed Square Capital, which offered the Flex Loan – a modified version of a merchant cash advance. Today, Square loans are issued by Square Financial Services, Inc., a Utah-chartered industrial bank.
Square Capital then re-branded as Square Loans. The Square business loan product carries borrowing amounts between $100 and $500,000. Repayment works like a merchant cash advance: a fixed percentage of daily card sales is held back as the repayment amount. Repayment comes mainly from sales processed through Square.
How Do I Qualify for Square Capital Loans?
Square’s business loan product is invite-only, meaning the company notifies you when your account becomes eligible based on various loan eligibility criteria. Eligibility factors include your Square sales volume, account history, and customer mix. You only need a Square POS account since eligibility is based almost entirely on your Square sales volume.
Other Important Factors for Square Capital:
Square doesn’t publish exact eligibility criteria. You won’t know if you qualify until you receive an offer. The company does publish some general guidelines on what businesses can do to increase the likelihood of receiving a loan offer. Those include:
- Processing volume: Square says businesses that process at least $10,000 a year through Square, and have used Square on at least 20 days in the last year, are more likely to be eligible.
- Payment frequency: Frequent payments on a steady basis help improve eligibility.
- New & Returning Customers: Square looks for a business with a healthy customer mix.
- Growing Business: Square also looks for sellers that increase their sales volume and customer base as they are more likely to afford the repayment structure.
- Account History: A positive account history with consistent sales and minimal chargebacks can improve your chances of receiving a loan offer.
Additionally, Square Capital does not lend to businesses that:
- Have multiple chargebacks in their Square account.
- Have recently experienced a decrease in Square sales.
- Take advantage of Square advances by swiping their own cards.
- Are not in good standing with a current or previous Square Capital loan.
For Square Business Loans, You Need to Know That:
The repayment structure for Square business loans is the same as a merchant cash advance. But instead of deducting payments as a fixed percentage of daily debit and credit card sales, payments are only deducted from your daily debit and credit card sales processed through Square. Square loans allow for flexible repayments based on a percentage of daily credit card sales.
Instead of a traditional interest rate or APR, Square charges a one-time, flat fee called a factor rate. Square does not publish a range for its factor rates; the fixed fee depends on your card processing history, loan amount and other eligibility factors. Factor rates work by multiplying the loan amount by the factor. For example (hypothetical figures), if you borrowed $50,000 at a factor of 1.12, it would look like this:
$50,000 x 1.12 = $56,000 – the total fee you’d pay for borrowing the money is $6,000.
The percentage of daily sales that go towards repayment is sometimes called a “holdback rate.” The holdback rate is set in your loan offer, and a smaller loan amount comes with a lower percentage of daily card sales.
Unlike traditional merchant cash advances, each Square loan has a maturity date by which the balance must be paid in full. And though your daily payment depends on your sales volume, you must also meet the minimum payments listed in your loan offer. Your daily payments might not put you on track to fulfill this requirement. In this case, Square might contact you about catching up.
There are no prepayment penalties. But since the fee mentioned above is charged upfront, you won’t save money by paying early. Applying for a Square loan does not affect your credit score, and Square does not report to credit bureaus, though Square Financial Services may run a soft credit check.
How to Apply for a Square Loan:
Square’s business loan product is only available to Square sellers, and even then, it’s invite-only. Simply being a Square seller does not guarantee qualification. You’ll receive an email and Square Dashboard notification when you become eligible.
Step 1: Accept the Invitation
Eligible Square customers can accept the invitation on their account dashboard.
Step 2: Customize Your Offer
The loan invite includes the borrowing amount Square offers. You cannot request more than the offer, but you can request less. Use the slider to determine your borrowing amount.
Step 3: Final Approval & Getting Funded
Square will verify your business’s information through Square Financial Services, Inc., a Utah-chartered industrial bank that issues all Square loans. You may be asked to upload additional documentation, like proof of your employer identification number (EIN).
Square will perform a final check to ensure everything looks correct and then approve the loan. Applications generally take 1-3 business days to review; once approved, funds arrive instantly in Square Checking or in 1-3 business days in a linked bank account.
Square Capital: Post Funding
Your loan agreement with Square will specify a “Repayment Start Date.” The company will begin deducting a fixed percentage of your daily card sales as repayment on that day.
Because of the minimum payment requirement, you should periodically check your repayment progress in the Square Dashboard. You can easily do this in the Square Account dashboard.
If you have extra cash, you can make a manual payment or pay off your entire loan at any time. Manual payments do not reduce the fixed fee, but they help you stay ahead of the minimum payments and maturity date.
Square says there is no set amount you need to repay before receiving a new offer, though businesses may become eligible as an existing loan nears payoff. Again, this is invite-only, so there’s no guarantee that you will receive additional offers.
If you receive and accept an offer, the new loan funds will pay off the remaining balance of the current loan.
What are the Advantages of Square Loans?
The business loan may be one of your most accessible financing options if you use Square to process payments. The loan offer details include customization possibilities for the loan amount, repayment terms, and eligibility criteria. There’s no minimum credit score or time in business, unheard of in the business lending industry.
Once you’re eligible, you review your offer in the Square Dashboard and provide basic details such as your SSN or ITIN, date of birth and EIN, if any. It’s safe to say that no other business lender will be able to offer this level of convenience.
Square does not require collateral for loans of $100,000 or less, and requires a personal guarantee only for loans over $250,000. For loans over $100,000, Square may take a security interest (a lien on business assets) and file a UCC statement.
Square’s fixed fee may compare favorably with a typical merchant cash advance. For context, a regular merchant cash advance might carry a factor rate of 1.5. Square does not publish a maximum fee, so compare the fixed fee in your offer with other quotes.
Lastly, Square does not charge a prepayment penalty, and paying early does not change the fixed fee.
What are the Disadvantages of Square Loans?
The most significant disadvantage of Square Capital is that it’s only available to Square customers. Much like PayPal and Stripe, many Square customers are younger, smaller businesses. Older businesses have likely used the same payment processor for years and are less likely to switch to a POS system like Square.
Square’s loan product goes up to $500,000. While that amount can handle many working capital needs, it might not be enough for some businesses to invest in growth. You should consider a different small business loan provider if you need more than that amount.
Also, the repayment structure has limits on its flexibility. With a traditional merchant cash advance, payments fluctuate with sales volume.
When you make lots of sales, you pay more, and vice versa. The same system applies to Square’s business loans, but only to a certain point.
Each Square loan has minimum payment requirements and a maturity date set in the loan offer.
But what if your daily payments haven’t put you on track to fulfill one of these requirements? What if you run into a string of slow days?
You may have to make manual payments to stay on track with these requirements even though you’ve been following the rules and making daily payments thus far. If a minimum is missed, Square Financial Services may debit your Square balance or linked bank account, and your repayment rate may increase.
Square gives general guidance (such as $10,000 a year in processing) but no guaranteed eligibility threshold. To clarify, there’s no universal definition of “strong” sales.
There’s also no published process to discuss or challenge eligibility. Square reviews accounts daily to determine eligibility. For this reason, you won’t know if you’re eligible for funding until that invitation appears in your Square account.
Pros & Cons
Pros:
- Easy & convenient for eligible Square sellers.
- Flexible eligibility requirements.
- Automatic repayments.
- One fixed fee, with no interest, late fees or prepayment fees.
Cons:
- Exclusive to Square customers.
- Offers are invitation-only, with no open application.
- Priced as a fixed fee like a merchant cash advance, and can cost more than traditional small business loans.
- Loans cap out at $500K.
Square Capital FAQs
How Many Times Can You Get a Square Capital Loan?
Square does not specify how many times you can take out a loan. What we do know is that a new loan offer can pay off the remaining balance of your current loan, and Square says there is no set amount you need to repay first. So, you could theoretically keep taking out Square loans as long as you continuously become eligible for renewals.
What Do Square Loan Reviews Typically Focus On?
Reviews of Square Loans are mixed. Square’s banking and loans profile on Trustpilot showed a 3.3 rating from about 1,359 reviews in October 2026, and Square, Inc. is BBB accredited with an A+ rating.
Positive reviews talk about the ease and convenience of getting a loan. While users must wait to see if they’re eligible, the process is quick and painless once the invitation comes in.
Many users commented that they have renewed loans with Square several times. They enjoy the ongoing relationship and continued loan offers.
Negative reviews often talk about the price. Square Loans are short-term financing, with a maturity date set in each loan offer. Most short-term financing arrangements are more expensive than traditional long-term loans.
Several small business owners expressed frustration with being denied future rounds of financing. Again, Square uses an algorithm to determine eligibility. Several customers stated that after several renewals spanning years, they were suddenly denied a new loan and had no recourse to challenge the determination.
Finally, several users talked about the daily repayment structure. They found that the holdback rate interrupted their regular cash flow. We highly recommend ensuring your cash flow can handle loan repayment.
How Do I Know If I Qualify for a Loan with Square Capital?
Square does not publish exact eligibility criteria. Since there’s no open application, you won’t know if you qualify until an invitation appears in your account.
It’s unclear if you can qualify by simply processing your typical sales volume instead of gradually increasing it over time. Square lists processing volume, account history, payment frequency and customer mix among its eligibility factors, and says businesses that process at least $10,000 a year are more likely to be eligible.
What are Typical Square Capital Loan Amounts?
The minimum borrowing amount is $100, and the maximum is $500,000.
Will My Second Square Capital Loan Have Better Terms Than My First One?
Square evaluates each offer separately, so a later offer’s amount and terms may differ from your first loan. Review each new offer’s fee and repayment rate before you accept.
What if I’m Declined by Square Capital?
As a reminder, the loan product is invite-only. Not receiving a loan offer could be considered a form of rejection. Also, an offer is not a final approval: Square reviews the application before funding, and a denial is possible at that stage.
Thankfully, you don’t have to significantly increase your sales volume to qualify for the myriad of other online business lenders out there. Instead, these business lenders require consistent sales to show that your business is not failing.
Most lenders have very low minimum credit scores and annual revenue requirements of less than $100,000. You can apply for equipment financing, bad credit business loans, accounts receivable factoring, SBA loans, and many other types of working capital loans with the help of United Capital Source.
In summary, if you haven’t received loan offers from Square, this does not mean you won’t qualify for other equally advantageous products.
Making Your Decision
If you use Square to process payments and have grown your customer base, Square Capital is your most convenient financing option. Its single fixed fee may also compare favorably with some merchant cash advances, so compare your offer with other quotes.
However, if you’re looking to borrow more than $500,000 or prefer another repayment structure, you should explore other options that may be more conducive to your cash flow.
Square Loans offers invite-only funding with one fixed fee and repayment from daily card sales, while businesses that need more than $500,000 or a different repayment structure may prefer another product. For these reasons, UCS gives Square Loans a 4 out of 5 rating.
Disclaimer: The Square trademark is owned by Block, Inc. and its use herein is for reference purposes only and it does not indicate sponsorship or endorsement from Block, Inc.
Jared Weitz
Jared Weitz is the Founder & CEO of United Capital Source (UCS), one of the nation’s fastest-growing business financing marketplaces. Since founding the company in 2011, Jared has built a technology-enabled platform that has facilitated over $1.6 billion in funding to more than 40,000 businesses across the United States. Under his leadership, UCS has evolved into a full-service marketplace that connects business owners with 80+ lenders while providing hands-on guidance throughout the entire funding process. UCS works directly with each applicant, leveraging technology and experienced funding professionals to match businesses with the right financing options, structure deals, and guide them from application through funding and future growth. Jared’s work has earned national recognition, including the National Commercial Loan Broker of the Year award in 2019, and placements on the Inc. 5000 list in 2015 and 2017. He also serves as Broker Council Co-Chairman for the Small Business Finance Association, where he helps advocate for expanded access to capital for small businesses nationwide.
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