Is SBA replacing the Square Loans?

[RadioMcG]

We haven't received another loan offer - which I find odd because we are 100% paid off on the last one and typically see an additional offer at 80% or so.  All numbers are significantly up as well. Has anyone else noticed no offer? Or am I just stuck in unknown algorithm for now?

[Regina_B · Accepted solution]

👋👋Hey @RadioMcG and @ecantiques5

Thank you both for your posts. Regina from the Square Loans Team here. Given the current economic challenges facing many small businesses, we’ve had to reduce our Square Loans loan offers to uphold our mission of responsible lending. To help our sellers through this time, we are working with sellers who need payment relief on existing Square Loans loans outstanding. 

Though we may not be able to extend a loan offer through Square Loans right now, teams across Square are unveiling new ways to support businesses’ need for cash flow, and our team is extremely focused on bringing the SBA’s Paycheck Protection Program to our sellers. We also have a dedicated team researching new resources and are updating this list weekly. Here’s the link: Square Loans COVID-19 Business Financing Resources Support Center article. 

For more information about PPP, please take a look at our FAQ. Thanks again and take good care. 

[RadioMcG · Accepted solution]

HERE IS A COPY AND PASTE from a response posted today in the Square Loans section. Passing on the info I read, if you haven't seen it!

To the Square Community,

As we relaunch business loans, we’d like to explain why loan offers were unfortunately paused at the beginning of COVID-19.

First and foremost, we should have been more open with you about pausing business loans, and why it was necessary. We understand the timing was tough for many. We don’t like disappointing, and we know we did. We want to be more open with you about our business, and the lending industry as a whole, so you might understand why loan offers were paused.

Like many businesses, we were unprepared for a full-industry shutdown at the onset of COVID. Pausing loans until we could update our product to better measure the impact of government shutdowns on small businesses, as well as on our own, was the responsible decision.

Our ability to offer access to loans relies on backing from financial partners. When the COVID crisis began to unfold, it became clear that lending in that moment could possibly be irresponsible—for us and our partners, but also for the businesses receiving loans. While it’s true pausing loans was a business decision, we also never want to put any business in a potentially risky financial position. Our mission to better serve small businesses during times like these has further pushed us to start our own bank, which will debut in early 2021. We’ll be the first ILC bank charter issued in 14 years—enabling us to build and run our own bank systems designed for businesses like yours.

While pausing loans was a difficult decision, we saw another way to assist more small businesses through this crisis: We quickly shifted our resources to help over 75,000 small businesses access Paycheck Protection Program (PPP) loans through the SBA. At the time, PPP offered a sustainable way to access funding during COVID.

As of now, the business market has stabilized to where we can responsibly offer loan access to some businesses. However, eligibility criteria has been tightened. If you previously qualified for an offer, that may no longer be the case. Please know we are reviewing all of these factors regularly, your offer status could change soon. If you do become eligible, we’ll send you an email, and notify you on your dashboard.

Like everyone, our goal is to work our way back to normal. But right now, our main focus is on responsibly providing the Square community with access to funding, and making sure we communicate with you—openly, candidly—along the way.

We can’t thank you enough for your patience. We’re glad to be back to support your business, and we’ll keep you updated as we move forward. Expect to hear more from us soon.

Be well,

Jackie Reses

Square Loans

[Charlygirl]

HAS ANYONE BEEN OFFERED A LOAN FROM CAPITAL?

[Natethegreat1]

After hitting 97% paid off on 160k I was offered 32k loan. I processed more this year than last year too.. there’s no rhyme to reason on what their formula is now but it does seem by talking about it here helps get you noticed. It’s just disappointing that when we needed them they weren’t here for us. 

[Tritter82]

I received one in August. Was less than previous loans but understandable during these times

[Natethegreat1]

I understand to a point but an 1/8th of previous loan? With more processing? Doesn’t make sense.

[Tritter82]

Yes, it is frustrating but I'm sure they have their reasons. 

[bridgeray]

Wondering if anybody else is not receiving Capital Loan offers like normal. I’ve used the capital program very successfully over the last few years and was fully intending on continuing to do so. I am currently at 93% PAID on my current loan and would have normally had an offer back at at least 85%. I have tried calling customer support all week with no success...I’m sure they are very busy so I thought I would try here. Thanks for any response 😊

[gypsysoul1]

We are in the same boat! We have been receiving capital loans for many years as well. And by now we would have gotten an offer.  I have read on other sites it is because they are offering the PPP and not doing capital loans right now. 😞 I sure am sad about this b/c this is what my business buys inventory with every few months and I dont think square has treated us fairly when they stop loans just to help PPP.  They should have taken care of their loyal customers first and foremost.  I did see today that the deadline for PPP was the 16th so I am crossing my fingers that capital loans are in the near future! 

[bridgeray]

Same here. We purchase inventory quarterly with the capital loans and that has always worked out great for us. We always pay loans off quickly with no issues. I was able to get a rep on chat yesterday and he said that capital loans are being offered right now on a limited basis and to just keep checking dashboard for when we become eligible again. I usually get the same canned response every time I am able to get an actual person to talk to. It would have been great to have a heads up that this was going to happen because I made a large payment towards my loan to pay it down to get another one and I would have held on to that if I would have known it wasn’t going to be available. Hang in there!! Hopefully we will know something soon!! 

[werone1992]

Are the PPP and Square Capitol separate loans?

[Cvenn]

I should be eligible soon so just checking. 

[Jenn317]

They are not offering capital loans. It would be wonderful if someone from Square would be forthcoming with a timeline of when we can expect capital loans to resume, but so far...generic responses across the board. 

[Cafelegacy]

I think I might already know the answer to this, but I can't seem to find this specific question in the community and am looking for a more conspicuous answer. 

I currently have a Capital Loan which is about 77% paid off. This is my 2nd Capital Loan. Recently (this week), I applied for, was approved, and received the funds for a PPP loan.

With the economy picking up I have been overwhelmed with previous clients and new clients asking for my services again and it would be helpful for additional capital funds to grow. 

From what I assume, Capital loans are based on transaction data compiled through my Square location, and the PPP loan processing is managed through Square Capital, but a separate entity from Capital Loan processing. This is what I am trying to find out. 

So, the full question is: Does receiving a PPP loan, while nearly paying off a current Capital Loan, have any impact on receiving a new Capital Loan offer, or is the Capital Loan offer completely unrelated and unimpacted by PPP loans. 

I have read through all of the Capital Loan and PPP Q/As and FAQs, but haven't found this specific answer. 

Thank you. 

[bigpoppi]

@Cafelegacy  - at this point Square is not providing any capital loans, aka merchant cash advances. They discontinued them at the start of COVID-19 and only recently decided to tell all of us loyal customers. Some of us have had 7, 8 or 9 loans thru them and have been paid off. Many continued to process thru this whole ordeal and even increased sales. We have been left high and dry.

Interested  the details of your PPP loan. When did you apply? Do you have employees? Did you do it thru Square?

Thanks

[Cafelegacy]

Hey Bigpoppi. 

I didn't hear anything about capital loans being discontinued and I thought I'd read all I could:)

Regarding my PPP loan, I am a freelance writer, and while I don't have employees, I hire several independent contractors each year for illustration, graphic design, admin, transcription, etc. That being said, I am set up as an LLC with myself as a paid employee and intention of hiring part-time employees soon. So, when I applied, I applied as an employer per SBA direction. 

I did apply through Square, and received confirmation of application receipt Monday, June 15 at 4:18 PM. It was verified by Square and the bank on the same day at 4:54 PM. It was approved by the SBA at 9:50 AM on June 16, and I had funds in my bank account this morning June 17 by 6:00 AM. The times are based on the emails I received. 

The PPP loan offer I accepted was initially for $5,400 at 1% to be paid in 24 months after the forgiveness determination which I think was 8 weeks. However, after I was approved I received an email stating that for loans applied for after June 5, 2020, the payback start date and forgiveness determination were moved to 16 weeks, and instead of 24 months to pay the loan back if not forgiven, it was now 60 months. 

Admittedly, this was much faster than expected. Perhaps, it can be attributed to a much smaller amount than most, a drop in applications, or trying to fulfill loans prior to the loan application deadline. Whatever it was, my process was significantly shorter than most people who posted in the seller community. 

[bigpoppi]

@Cafelegacy - thanks for the info on your PPP loan... Congrats!

[Cafelegacy]

After reading all the posts on this thread, I don't know if I read the Square response the same way as most seem to be. The admin mentioned a reduction in offers and did say something about not extended an offer, though I took that as deliberate to the person who said they had not received a Capital Loan. 

I've only been using Square for a couple of years, but I read the seller community frequently and see non-stop for years accusations that Square is not extending or offering capital. At the same time, people continue to say that they are paying off a loan in record time that was offered only a couple months ago and that they are on their 5th, 6th, 7th+ capital loan. 

I understand the frustration of not receiving a capital loan, though I don't look at it as being malicious or giving up on sellers, or leaving sellers behind to fend for themselves as many posts reference. 

I think I take it as, while the PPP program is in effect, they have reduced or placed more stringent criteria to receive a capital loan, but not completely abandoned things. I mean, if people are getting capital loans, why would they post about it? Some may I guess, but in general, I think most would not. 

That being said, I get frustrated too with a degree in lack of transparency. It would be nice to see a notification that the capital program was suspended, reduced, or whatever. I look at Square Capital as a bonus that helps me grow, but not something I should depend on. But, maybe I haven't had the time to cultivate the necessity yet. Each business is unique and I'm certainly not a massive business.  

[bigpoppi]

@Cafelegacy  - not sure where you're coming from but like you said you're new. Some of us have been here from almost the beginning with upwards of 10 loans paid back.

You can be clear on this and Square Admin's have already posted it, in other threads, they have stopped all Capital Loans, end of story, until further notice. They took almost 60 days before they admitted the fact!

PPP has nothing to do with Square. They get paid a commission for originating the loans. None of it is their money.

carry on.....

[bigpoppi]

@Cafelegacy - rereading your post and I do think you're a little naive about this. Square uses capital loans as a reason to sign on board with them. I believe it is still or was on their website even when they knew they weren't extending loans. We refereed other businesses to square who gladly signed up because of capital loans........so capital loans was an inducement to transfer processing to Square

[Cafelegacy]

Perhaps I am naive. I am a small fish after all. 

[Tritter82]

I'm on my 10th or 11th loan with square. Although I feel it would be great if they were transparent I also understand this is a very risky time for them. Just because some of us continued with business/sales during the pandemic they cannot be guaranteed that will be the case if we have another resurgence. I prefer they be cautious now and be around in the future to once again be able to offer capital loans.

[maneka_hurcevio]

I hope you find the answer to this. It seems like they have stopped offering loans at this time. I did not apply for a PPP loan.

My business was thankfully not affected by COVID-19 we are still operating and sales are up.

I paid off my $50,000+ loan yesterday, the transactions were high that I was able to pay it through sales earlier than anticipated.  (paid off in 4 months). This is my 7th loan.

No other loan offer has been provided. My hope of another has gone, unfortunately looking elsewhere.