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. Sigue leyendo