Square dips into banking with quick cash for small businesses

Square has so far focused on helping businesses take payments; now, it's ready to make payments to get those businesses off the ground. The company has launched Square Capital, a quick financing service that uses card transactions for repayment. Every time someone makes a purchase, a small cut of that sale (on top of the usual card fee) goes toward covering the advance. Square is purposefully keeping things as simple as that. There's no application process, and there's no due date -- if business gets slow, it just takes a bit longer to pay things off.

Capital is new territory for Square, which is diving into the banking world in earnest after testing its service for a year. However, it has an edge over conventional institutions. As it's already tracking payments in some cases, it has a better sense of how much a business can afford to pay; it may be more comfortable with providing money to young shops if it knows they're already thriving. The new program may not help struggling outfits looking for rescue money, then, but it could help up-and-comers that just need a small financial boost to keep growing.