Square Capital Partners with Upserve

Square Capital and Upserve

In mid-August, 2016, Square Capital announced an alliance with Upserve, the restaurant management software company that purchased Breadcrumb earlier the same year. The startup claims to manage approximately $8 billion annually in transaction volume. This joint venture will make the Square Cap loan program available to selected Upserve customers. For the first time since its inception, Square Capital funding is available to businesses that don’t use Square for their credit card processing.

How does it work?

Square Capital, originally offering merchant cash advances, transitioned to offering traditional loans. With its new partnership, it will receive data from Upserve, and make lending decisions based on that data.

Square Capital

Upserve has already begun providing its’ – unnamed – individual customer sales and cash flow data to Square Capital, and Square in turn analyzes it with the intent of offering personalized loan offers to qualifying restaurants. Square Cap claims to use a proprietary evaluation process, which allows anonymity for the business, and then extends loan offers to selected Upserve customers through that company’s Smart Management Assistant portal. Square Cap doesn’t know who actually receives these offers until the customer accepts.

There are no minimum or maximum loan amounts.  They can be as little as a few thousand dollars, or as high as six figures.  But the average loan value among Square Capital’s recipients to-date has been moderately less than five figures. Though they have not specifically disclosed to CardFellow the actual monthly rates that Upserve borrowers will pay, Square Cap officials say it will be fixed and “similar” to those paid by its own customers: 12 to 13 cents for every dollar borrowed.

What’s in it for Upserve? For Square?

Upserve hopes the partnership with Square will result in growth by expanding the range of benefits for its clients, while Square Capital is undoubtedly eager to reach more consumers and achieve profitability in the wake of its autumn 2015 IPO.

It enables Square Capital to expand its financial services client base, but still keep acquisition costs low. The data it receives from Upserve minimizes its’ already low loan default risk. (Which currently sits at around 4% according to Square Cap.) It also shortens the typical small business loan evaluation process.

Upserve also helps give Square Capital access to valuable data that gives the lender a better, more refined understand of businesses it’s considering lending to and assists in identifying other business verticals that could be lucrative lending channels.

Indeed, with this loan service expansion, Square Capital is hoping to bring business lending to new and heretofore financially underserved small business retail niches. Almost 40 percent of all U.S. small businesses that apply for loans are denied, or only partially funded, according to the Small Business Association. This certainly limits their growth, especially the cash-heavy restaurant industry, where many businesses have low margins and few employees.

For Square, the real benefit is continuing to access the “low hanging fruit” of potential small business borrowers. So even if this is the first such joint venture for Square, it likely won’t be the last.

Should I accept a Square Capital offer?

This is a business and financial decision that you should consider carefully. Just because Square Capital loans may be easier to obtain or come with a less complicated eligibility process doesn’t mean you shouldn’t take them seriously as a financial obligation with real impacts on your business. If you’re unsure how loans and repayment may affect your business’ cash flow, it’s always a good idea to sit down with an accountant or other business professional before putting yourself in debt for your company.

Square Capital loans may be beneficial, but be sure to look at all aspects before jumping in.

Read more about merchant cash advances.

Am I eligible? How do I apply?

Currently, there is no application process. If you’re eligible, you’ll be notified. Qualifying restaurants among Upserve’s more than 7,000 customers should begin receiving loan offers by the end of September 2016.


Square Capital’s current small business lending service is similar to those offered by PayPal Working Capital and an anticipated small business lending rollout from American Express.  There are also a number of other traditional loan services as well as merchant cash advance companies.

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