For the first time, Square's lending program Square Capital is available to small businesses outside of the Square ecosystem.
Square announced today that it's partnering with Upserve, a startup that provides payments processing and software for restaurants, to create an extended network of merchants eligible to borrow from Square's lending program.
Debuted in 2014, Square Capital originally launched as a financing program for merchants actively using Square's platform. It promised reliable loans without the hassle of a lengthy application process or expensive fees.
The program has been a significant (and surprising) revenue source for the Jack Dorsey-founded company. Much of its success is tied to the fact that Square has the power to peak into a company's sales and financial stability, which means it only lends to those businesses most capable of returning the cash.
Square is hoping the same approach will work with Upserve merchants. Through this partnership, Square will receive anonymized sales data from Upserve's restaurant customers to help determine which borrowers pose the least amount of risk.
Square's intent to expand the lending program has been clear for some time. Last October, Square hired Jacqueline Reses, formerly the chief development officer for Yahoo, to lead Square Capital. Reses' move to Square was considered a significant loss for Yahoo and an equally promising gain for Square. It also signaled that Square wanted to scale the program beyond its ecosystem.
In May, Square revealed that it was transitioning Square Capital from cash advances to traditional bank loans, with fees between 10 percent to 16 percent of the amount borrowed. Square said the move would provide sellers more flexibility and help attract new investors to the service, but it was a clear revenue play as well.
Going forward, it's safe to assume Square will forge more partnerships with similar data-sharing practices to help grow Square Capital (and its revenue) even further.