I've used Square Capital twice, and have been happy with the results. I view it as a wonderful tool in the right circumstances. But I believe there is one aspect of using Capital that many are unaware of.
On paper, your business profit will appear to be reduced by more than double the amount of your Square Capital loan. This is because your reported business expenses will increase (as you spend the loan money) and your bank deposits will decrease (as a percentage of revenue is going towards paying off the loan and the fee).
For example, say I take out a $2,800 Capital loan with a $500 fee. Everything goes well and I pay off the loan. But when I run a "profit and loss" statement, what does my balance sheet show? It shows I spent $2,800 more on business expenses, but also $3,300 *less* in revenue came to my bank account.
My business profit appears to have decreased by $6,100 even though it actually remained flat. Hopefully I used the loans on something that increased my overall business of course. But even if I wind up ahead in profitability, those profits are still shown as being less than they would otherwise...by an amount more than double the loan amount.
When I walk into a bank to try and get a regular business loan, and they ask to see my financial records, do you think this is the sort of thing they like to see? How about potential business partners or investors? Or someone interested in buying my business? No.
From the outside, taking a Square Capital loan is likely to make your business appear to be less successful. I'm not saying it's not worth it, and I'm not trying to raise pitchforks against Square Capital. It's an appropriate tool in certain situations, and I do not regret the times that I've used it. Just realize that every financial decision has consequences. Make sure you are aware of those consequences so you can make an informed decision.
Good luck!
