With Square Capital, Square Starts Providing Controversial Merchant Payday Loans
Jack Dorsey’s business launches a pilot for providing exactly what are basically unregulated loans.
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Square’s search for brand new income streams is pressing it toward a controversial industry: Merchant cash advances.
The monetary item, which runs not in the legislation of loans, is usually a final resort for funding for business people who either have bad credit, can’t get a financial loan, or can’t have a mortgage fast enough. And so the business proprietor agrees to cover a “lender” a cut of future product product sales, plus a fixed cost on top, to obtain a swelling amount of cash at the start.
On The Information reported that Square was experimenting with extending capital to some of its customers, but few other details were available wednesday.