Square and Homegrown have partnered on a pilot program that will offer expansion capital through flexible financing for Square sellers that have two or more locations and are ready to open another one.
The program is launching with $24 million in committed capital and offers proven operators access to terms of up to four years and amounts of up to $1 million, with monthly payments that flex with revenue, Homegrown said in a Thursday (May 28) press release.
The capital is non-dilutive, and there are no personal guarantees or balloon payments, according to the release.
The program brings together the existing seller relationships of Square, which is a commerce platform for sellers, and the expansion-stage underwriting expertise and customer experience of Homegrown, which is a provider of revenue-based growth capital for brick-and-mortar businesses, per the release.
It is built for Square sellers such as coffee shops, fitness studios, restaurants, beauty and wellness brands, and neighborhood retailers, and is designed to allow them to access expansion financing without leaving the Square ecosystem they already trust, the release said.
“So much of America’s small business economy runs on Square,” Homegrown CEO and Founder Michael Davis said in the release. “This partnership brings a new type of expansion capital to brick-and-mortar entrepreneurs across the country, and that’s a meaningful moment for both teams.”
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Square Banking Head of Product Andrea Raj said in the release that this partnership will add a new option to the access to capital Square has been providing to local business owners for more than a decade.
“Partnering with Homegrown to provide sellers with a new capital option is about extending that same commitment to a new stage of growth: the moment a seller has proven their concept and is ready to take it further,” Raj said.
In its own announcement of the pilot program, Square said the program aims to provide an alternative to financing options that require personal guarantees, rigid repayment schedules or financing structures that dilute a seller’s stake in their own business.
“Expansion Capital is the latest example of our ongoing commitment to expanding access to financing for sellers at every stage of their journey, ensuring they have the right tools for the right moment,” Square said in its announcement.
Amrita Ahuja, chief financial officer at Square parent company Block, said during a May 7 earnings call that the company expects to see continued momentum from embedded lending products and seller expansion initiatives.
In another recent move, Square said in March that it was extending credit to more sellers after improving its underwriting models to assess the creditworthiness of those with non-standard revenue patterns. The company said the new underwriting models enable it to offer Square Loans to project-based earners, seasonal operators and businesses that are new to Square.
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