Square has launched its loan offering in Canada, making the financing available to its Canadian merchants.
“As the pandemic eases and Canadian business owners look to the future, they need help moving forward now more than ever before.”
– Luke Voiles
Square Loans uses transaction data to provide customized financing to eligible sellers. Businesses receive one upfront loan fee, which is automatically paid back as a set percentage of daily card sales with Square. This means that merchants pay back more when sales are strong, and pay less during slower periods. Square claims that the loan fee never increases for the seller.
In a survey commissioned by Square, it found that roughly seven in ten Canadian small business owners have never accessed traditional funding, preferring to be bootstrapped instead. The survey also revealed that 92 percent of business owners who had received traditional business funding found the process “intimidating” while 84 percent said traditional business loans were overly “complicated.”
Square Loans initially launched as Square Capital in 2014. Prior to launching in Canada, Square Loans was made available in the United States (US) and Australia. The payments company claims that it has provided more than $9 billion USD in financing to more than 460,000 businesses, with an average loan size of $6,750 USD.
Square Loans comes to Canada after many years of the company operating in the country. In September, Square brought its small business expense card to Canada, and also recently launched Square Marketing.
First launching in Canada in 2012, Square eventually opened an office in Waterloo in 2014, and a Toronto location in 2016.
Square is among a number of e-commerce firms that offer loans for Canadian small and medium-sized businesses (SMBs). In 2020, Shopify launched Shopify Capital in Canada, allowing cash advances to its merchants that are repaid through future sales.
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Other companies that provide similar offerings include Montréal-headquartered Lightspeed, which partnered with payment processing software giant Stripe to make its SMB loans offering available for Canadians in 2020. Lightspeed Capital is available for retailers using Lightspeed Payments in the US and provides financing of up to $50,000 USD per retail location.
Clearco is another major player in providing loans to e-commerce businesses The Canadian-founded company has been focused on global expansion of late, recently committing to invest $164.4 million CAD into digital-first Irish businesses. Clearco’s technology combines AI and data science to offer funding in the form of non-dilutive capital for e-commerce businesses.
“It’s no secret that small and medium-sized businesses face tremendous barriers when it comes to accessing funds to help them transition and grow,” said Luke Voiles, general manager of the business banking team at Square. “As the pandemic eases and Canadian business owners look to the future, they need help moving forward now more than ever before.”