Card payments and fintech company Square announced that it is set to launch Square Loans in Australia. Square Loans is a program formulated to help small and medium enterprises (SMEs) grow by providing them simple and quick access to funds.
According to Square, Australia will be the first country outside of the U.S. where it plans to expand its small and medium business loans to.
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How will it work?
Square intends to utilize historical transactional data and create a relatively simple process. The process will involve no paperwork and applicants will get access to their money as early as the next business day.
The US-based company explained that small businesses will be charged with an upfront loan charge. This can be repaid effortlessly as a fixed portion of card sales on Square.
As a result of this model, companies will be able to repay more money when sales are doing well, and pay less when the business starts to slack.
According to Samina Hussain-Letch, Head of Industry and Payments, Square Australia, said that typically, small businesses have faced difficulties while accessing different forms of funding. Square Loan will address this challenge.
Square’s loan business in the U.S.
Before venturing into Australia, Square’s loan business has achieved success in the U.S.
According to Square, the company has assisted with an upward of $8 billion in financing more than 4,35,000 small businesses.
Square is confident that it will meet with the same fate in Australia as small businesses are increasingly turning to the platform for financial aid.
Australia’s lending market
Australia’s lending market has witnessed considerable activity over the past year particularly due to the COVID-19 pandemic.
Small business financing has continually faced several challenges in the past across Australia. However, the arrival of new financing alternatives is gradually transforming the landscape.
As per research conducted by Square, more than 50% of the small businesses in Australia have faced the repercussions of the COVID-19 pandemic.
Besides, as the country gradually recovers from the pandemic, Square believes that around 20% of small to medium-sized businesses are likely to apply for a loan in the upcoming months.
Image Source: Square