Square Capital Revs Up, Funds $189M to Small Biz in Q2

| By:

Square IPO

Square is proving that the business loan sector is still hot, especially since their payment processing ecosystem requires nearly no marketing budget to advertise Square Capital. With $189 million funded in Q2, a growth of 123% year-over-year, their shift from merchant cash advances to loans seems to have had the desired effect since they have attracted even more investors willing to buy them.

“We sell a majority of our loans to third-party investors for an upfront fee and a small ongoing servicing fee. In addition, we continue to have a strong continued pipeline of interested investors,” the company said in its earnings report.

The average loan size remains small, only $6,000, but ranges from $1,000 to $100,000. Square CFO Sarah Friar, said during the earnings call that their data shows an overall increase in the gross payment volume of merchants who use their loans, which indicates that borrowers are indeed using the funds to grow their businesses.

A typical Square Capital loan is close to 10% of a seller’s annual processing sales and the average repayment term is 9 months. Loss rates remained steady at 4%.

Friar also said that PayPal Working Capital and American Express Working Capital were not really competition since they are working directly with their own existing user base.

The company made about 34,000 loans in Q2.

Last modified: August 4, 2016
Sean Murray

Category: Business Lending

Home Business Lending › Square Capital Revs Up, Funds $189M to Small Biz in Q2


    One Percent Ventures

    South End Capital

    Merchant Financing Leads

    Fresh Funding


    Highland Hill Capital

    AMA Recovery


    National Funding

    CFG Merchant Solutions

    Balboa Capital

    Lending Valley

    IOU Financial

    Legacy Capital Group

    Total Merchant Resources

    ROC Funding Group

    Spartan Capital

    Banana Exchange

    United Business Funding

    Pearl Capital


    Hunter Caroline

    CAN Capital

    Splash Advance

    Central Diligence Group

    Thor Capital Group