Square To Funnel New Funds Into Expanding SMB Financing

Square announced its latest funding round on Tuesday (May 12), with investors including Colchis Capital and repeat investor Victory Park Capital contributing. The new funds will be used to expand the company’s small business financing program, Square Capital, which aims to help “businesses grow by giving them access to funds in a quick and simple way.”

Though the exact amount of financing from the deal remains undisclosed, Square says the agreement will enable Square Capital to advance “hundreds of millions of dollars” to independent businesses this year.

The company said that last month it gave out $25 million in cash advances. Overall, Square Capital has now extended more than $100 million to over 20,000 independent businesses since its May 2014 launch, the company stated.

More than 80 percent of merchants who have completed their Square Capital advances have signed on for a second round, the company said in a release. Under the terms of the relationship with merchants, Square Capital gets a specific amount of a customer’s card sales, via a percentage of daily sales – a platform that lets merchants pay more when sales are strong and less when sales are in a slowdown.

As noted by MPD CEO Karen Webster last month, Square’s evolution since launching in 2009 has been an interesting one. And its partnership with Starbucks was what really “elevated the blood pressure of everyone in payments,” she wrote. But that partnership was severed in December 2014, and now the company has shifted to a focus on merchant services — a segment which Square Capital shares with Square’s P2P payment system CashTags, its POS hardware, and its Square Stand/Register, and more.

And after a “year of bad press,” Square founder Jack Dorsey and his comrades seem to have a clear vision in mind for the future of Square. And it seems that that vision is one that will be hard to disagree with — after all, they just want to make commerce easier on everyone, states Dorsey.