Warning... LONG POST! 😂
I’m going to add my two-cents worth here. This comes from 40-plus years owning businesses through various downturns, recessions and such. Before I do, I’ll preface this post with this — I have had about a half-dozen Square Capital loans over the years. All of them, including my current one that is almost paid off, show that I have never had a problem with paying them off according to the terms given, even during COVID. Yes, my business is down 30% over last year, and nearly 50% over the past two months, but at least I am still in business. I have tightened my belt and cut expenses to the bone (I’m 60 and working 70+ hours a week). Somehow, it is all working, and not only is my current Capital loan nearly paid off (less than 3 weeks to go), but I’ve nearly paid off all of my debt, period.
Now... here’s what I’ve seen in the credit market over the past 5 months. No one is lending for non-guaranteed purposes. Unless a bank has a horse in the race — ie - a house, a share of the business, collateral of some type — the funds are just not there, period. Square doesn’t actually lend their own money, but they get the funds from a third party bank. Therefore they are completely at the mercy of said third party bank, for now.
Besides my cafe, I also own an historical property redevelopment company. Pre-COVID, I opened a multi-million dollar line of credit and provided my investment/retirement accounts as collateral. Once COVID hit, my investments took a major hit so my access to that line of credit is currently restricted so that I don’t get in over my head, so to speak. Besides that line of credit, I’ve found all other credit lines, and credit cards, with diminishing available balances and expect that they all will continue to be reduced for the foreseeable future. Thankfully, even though I can not access my lines of credit, the interest rates on all of them are at stupidly crazy lows.
Even banks/lenders that I have a multi-decade relationship with are not lending right now. It’s not because I’m not good for it. I am good for it, and they all know it. But given the incredible uncertainty of the times, they won’t take the chance. Anyone paying attention to the current COVID situation knows that even tomorrow is not guaranteed for any of us that own a business. It wouldn’t matter if every business was allowed to re-open at 100% capacity with no restrictions tomorrow, and it stayed that way. Until the general public is comfortable, and until the unemployment rate is reasonable again, and until a quarter of the population is no longer in danger of being homeless and hungry, we are where we are. Lending is a risky business in the best of times, and right now it is insanely risky. Uncertainties is the enemy of the banking business.
I’m choosing to assume, and plan under the assumption, that I will not have any credit available anytime soon. I’m paying off all debt as quickly as I can. And I’m only planning to spend what I reasonably foresee as possible (cash only) for the next two years. I consider this to be wise and prudent. I have decided to live in the here-and-now — not the past which is gone, or the future that I hope happens. Everything has changed, and it is not going to go back to where it was ever. Heck, I’m even working on a business plan to change my business model starting next year, knowing that my current model is outdated. That, as they say, is reality. My previous credit rating and history is meaningless in the age of COVID. That is a fact.
Having said all of that, I must WHOLEHEARTEDLY agree with something that has been said on this post and other posts too many times. Square needs to work on communication. Square needs to work on being transparent, open, honest and straightforward with all of their sellers. They are not even close to this ideal. However, Square is not alone in this deficiency. Most companies of the 21st century have no clue how important real communication is. Instead of honesty and transparency, they create scripts for their employees to use, and woe be unto any employee who deviates from the company-line. Square isn’t any better — or any worse — than all the rest. However, if they really want to set themselves apart from the rest, they would invest in a customer service team that actually helps customers with their issues, rather than a team that just follows the script.
That’s my two-cents worth.😎
I will admit to standing corrected. True, there is credit available. I just tend to discount/ignore non-traditional lenders from whom I get unsolicited offers. I have used Square because of the existing business relationship. Having tried other non-traditional lenders I don’t even give a second look to their offers. So, I will admit to cherry picking and focusing on traditional lenders in my original post.
Otherwise, I don’t disagree with you about the recent (in)actions of Square Capital. It’s hard to dispute the facts from so many, including myself, about their absence from the conversation and from being a part of any solution.
I’m glad that you found someone to work with you, @Jwp32708 . Best wishes.
