Good news, bad news, eh @cmeshine. There are a number of reasons that COULD be part of why your new offer was lower.
- Square might be slowing down on how much loan exposure they want to have on their balance sheet. They are, after all, a publicly traded company that has to answer to their shareholders and investors.
- If our sales are flat or at least not growing at a good rate to cover inflation and higher interest, then Square’s algorithm understands that inflation is eating into our available cash to pay bills, etc. Flat sales (or very slowly growing sales) are always red flags to lenders, Square or not.
- Sometimes how long it takes us to pay off our current loans can be a factor. Let’s say that previous loans were paid off with automatic payments in 8-10 months in the past. But for this current loan it took us 12-15 months. That tells Square that our card processing volume can’t keep you with higher loan amounts. Yes, they give us 18 months to fully pay a loan, but they obviously prefer that we pay them off closer to the 12 month mark.
- If our cash/card ratio drastically changes, and cash spikes or is consistently higher than historical for our business, that is another red flag. Since Square must only consider card volume when calculating repayment rates this can become a problem.
Of course, I’m not saying that any of these contributed to your lower offer. I’m just throwing out a few reasons why this CAN happen.
Hi @Fromwithin. Square Loans are still going out. To clarify some widespread confusion, though, understand that just because everything is “green” does not mean that loans SHOULD be offered. The status page only shows what big issues might be present with our accounts so that we can hopefully fix those.
However, other factors come into play. These include things like Square having limits on the total amount of loan risk they are willing to take and have on their balance sheets. Another good example of when we might be “green” and still not see a loan is this scenario. Let’s say that our card processing volume this year is very close to or slightly above last year. In this case, because of persistent inflation and high interest rates, our ability to repay a loan might be considered lower. Like most lenders, I would imagine that Square likes to see not only growth year-over-year, but they need to see marked, steady growth. Stagnant sales do not give lenders confidence that loans can be repaid in an economy with high interest and still growing inflation.
Obviously, there is no way to know for sure. Since Square is not obligated to offer loans we are at the mercy of their algorithm. I just wanted you to be aware that the loan dashboard doesn’t give you the complete picture, nor does it say “all good so we WILL get a loan.”
Anyway, I can attest for sure that loans are going out. I’ve received 4 offers over the past few months. I’m just not interested at this time.
Square has definitely NOT stopped loans to F&B sellers. I sell ice cream. I’ve received over 4 offers in the past few months, and I’m not even in the market for a loan. I know a local coffee/pastry shop seller who is also getting regular loan offers. It’s never a good idea to generalize because of our own experience, because that scares others needlessly. So, for anyone reading this, the F&B industry IS getting loan offers. However not ALL F&B sellers are getting loan offers. That’s about all that can be said, really.
