Square Extends Cash Advance Solution to UK Merchants

Square is offering its working capital solution, Square Cash Advance, to businesses in the United Kingdom.

“Whether a restaurant owner, retail merchant or beauty salon, fast and easy access to funds helps sellers manage daily expenses without delay and with no interest — just a simple, upfront funding cost,” the company said in a Thursday (July 24) news release.

Approved businesses can get their funding within days, according to the release. Square collects repayment by deducting a percentage of every card sale until the balance is fulfilled. The cash advances can be used for business expenses such as buying inventory and upgrading equipment. It can’t be used for personal, household or family reasons.

The company polled sellers to identify the biggest problems facing business owners and found that small and micro businesses are consistently seeking better cash flow solutions, the release said.

“We know that the No. 1 reason small businesses fail in the U.K. is due to issues with cash flow,” Samina Hussain-Letch, executive director of Square U.K., said in the release. “This product takes that pressure away by providing our sellers with access to the funds they can use to run and unlock future growth in their business and be much better set up for success.”

The pressure facing small- to medium-sized businesses (SMBs) has led 54% of them to resort to using credit cards, both business and personal, to fund their operations, according to the PYMNTS Intelligence report “SMB Growth Monitor: How Firms Use and Choose Credit Cards.”

“This intermingling of personal and business credit isn’t without risks,” PYMNTS wrote Friday (July 18). “Revolving debt — especially on personal cards — can threaten both credit scores and long-term financial stability.”

At the same time, credit cards remain the most accessible form of working capital for many SMBs, although their flexibility brings higher interest rates, fragmented management, and the personal liability that comes with a merchant using an individual card for business needs.

Meanwhile, PYMNTS Intelligence research found that half of financial institutions reject micro-business loan applications due to unverifiable legitimacy.

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