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Square Capital partners with Upserve to offer loans to more small businesses

Jack Dorsey, co-founder and CEO of Square and Twitter, stops for a coffee at Black Velvet Espresso on April 11, 2016 in Melbourne, Australia.
Image: paul jeffers/Fairfax Media via Getty Images

You don’t have to be a Square business to get a Square loan.

The company will start offering lending for the first time to businesses that don’t use its payment processing system, it announced Wednesday.

The expansion in lending services comes through a partnership with Upserve, the restaurant management system.

We are proud to partner with Upserve and offer loans through Square Capital to even more small businesses who traditionally face barriers when seeking access to funds, Jacqueline Reses, head of Square Capital, said in a statement. Square and Upserve share a passion for empowering businesses to grow and achieve their goals, and a crucial component to success is access to capital.

Square Capital began as a way to provide loans to small businesses that use Square to manage its customer payments. The loans were personalized based on the activity Square sees the businesses doing through its payment processing system. A fixed percentage of future daily card sales through Square then go toward paying off the loan.

The loans require very little in the way of an application, since Square already has access to its businesses’ financial information.

Upserve clients will similarly receive loans directly through that service. They will also repay their loans through a fixed percentage of daily sales.

The partnership represents an opportunity for Square to reach more clients without extensive advertising on its part. The partnership could be the first of many as Square looks to extend the reach of Square Capital.

The business loan market could become a major source of revenue for Square, which began as a way for small businesses to take non-cash payments from customers. Its most recent earnings pleased investors after the company endured a rocket start to 2016.

While payments are still its core business, Square’s loan operations is seen by analysts as important to the company’s growth. One analyst recently called Square Capital a “shining example” of the company’s ability to make money from business services that aren’t payments.

Square’s CEO Jack Dorsey also serves as CEO of Twitter.

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