Square, the payment processing company, has recently acquired a majority stake in Tidal, the music streaming service. This move has been seen as a strategic one by Square, as it looks to expand its offerings beyond just payment processing. However, this is not the first time Square has made a move into the world of finance. In 2018, Square launched Square Capital, a lending service for small businesses. In this article, we will take a closer look at Square’s latest financial venture, Square Financial, and how it is disrupting the traditional lending industry.
Square Financial is a lending service offered by Square that provides loans to small businesses. The service was launched in 2018 and has since provided over $9 billion in loans to more than 200,000 businesses. The loans range from $500 to $250,000 and are designed to help small businesses grow and expand.
One of the key features of Square Financial is its fast and easy application process. Businesses can apply for a loan online and receive a decision within minutes. This is in stark contrast to traditional lenders, which can take weeks or even months to approve a loan application.
How does Square Financial work?
Square Financial uses a unique approach to lending that is based on a business’s sales history. Instead of relying solely on credit scores and financial statements, Square Financial looks at a business’s transaction history with Square. This allows Square Financial to provide loans to businesses that may not qualify for traditional loans due to a lack of credit history or collateral.
Once a business is approved for a loan, the funds are deposited directly into their Square account. The loan is then repaid through a percentage of the business’s daily sales. This means that businesses only repay the loan when they are making sales, which can help alleviate cash flow issues.
How is Square Financial disrupting the lending industry?
Square Financial is disrupting the traditional lending industry in several ways. First, its fast and easy application process is making it easier for small businesses to access capital. This is particularly important for businesses that may not have the time or resources to go through a lengthy loan application process.
Second, Square Financial’s unique approach to lending is allowing it to provide loans to businesses that may not qualify for traditional loans. This is helping to level the playing field for small businesses and giving them access to the capital they need to grow and expand.
Finally, Square Financial’s repayment model is also disrupting the lending industry. By tying loan repayments to a percentage of a business’s daily sales, Square Financial is providing businesses with a more flexible repayment option. This can help alleviate cash flow issues and make it easier for businesses to manage their finances.
What are the benefits of using Square Financial?
There are several benefits to using Square Financial for small businesses. First, the fast and easy application process means that businesses can get the capital they need quickly and without a lot of hassle. This can be particularly important for businesses that need to make a purchase or investment quickly.
Second, Square Financial’s unique approach to lending means that businesses that may not qualify for traditional loans can still access capital. This can be a game-changer for small businesses that are struggling to get the financing they need.
Finally, Square Financial’s repayment model is also a major benefit for small businesses. By tying loan repayments to a percentage of daily sales, businesses can manage their cash flow more effectively and avoid the stress of having to make fixed monthly payments.
Conclusion:
Square Financial is disrupting the traditional lending industry by providing small businesses with fast and easy access to capital. Its unique approach to lending is allowing it to provide loans to businesses that may not qualify for traditional loans, and its repayment model is providing businesses with a more flexible repayment option. As Square continues to expand its offerings beyond just payment processing, it will be interesting to see how it continues to disrupt the financial industry.
