Concerns Regarding Loan Denial and Payment Structure Change

[FloresLiquor]

Dear Square Team,

      I am writing to express my deep disappointment as a loyal customer who has been doing business with Square for the past five years. Despite Square's credit and debit card processing fees being among the highest in the industry, I have continued to use your services due to the convenience and flexibility of your loan structure, particularly the automatic repayment from credit card sales, which has been instrumental in helping my businesses grow.

          However, I am increasingly frustrated with how recent loan applications have been handled. I currently have two business loans with Square—one for Flores Liquor and another for Liquor Town. As of today, May 27, 2025, the loan for Liquor Town is 28% paid off, and the loan for Flores Liquor is 79% paid off.

         About a month ago, I received a pre-approval offer for $26,000. However, the application was denied on the grounds that my Liquor Town loan was not current. The reason for this delinquency is critical: Square changed the repayment structure from the traditional percentage-of-sales model (typically 15–20% of daily credit card sales) to a fixed monthly payment. 

Had the original percentage-based repayment model been maintained, I would have remained current on the Liquor Town loan, and the Flores Liquor loan application likely would have been approved. It feels as though this change was made intentionally, knowing it could lead to missed payments and provide a reason to deny future loan applications.

Today, I received another pre-approval offer—this time for $29,000—while my Flores Liquor loan is 79% paid off. However, I am hesitant to apply again, as I expect the same denial due to the Liquor Town loan status.

    My questions and concerns are as follows:

1. Why was the repayment structure changed from a percentage of sales to a fixed monthly payment ?
2. Why are pre-approval offers sent if Square already knows that a customer is not current on another loan, making denial inevitable?
3. Why isn’t loyalty and overall account performance across multiple businesses taken into consideration during the loan approval process?

Square loans are a vital tool for small businesses like mine. It is disheartening to feel that customer loyalty is overlooked and that changes in repayment structure are being used as grounds for denial rather than offering support.

      I hope Square will take this feedback seriously.

[marielmt · Accepted solution]

Hi @FloresLiquor!

We appreciate you letting us know about your situation.

We currently have two loan products available through Square Financial Services. One repaid with fixed monthly payments and one repaid with fixed percentage of daily card sales. All loans are still subject to credit review. This means that a pre-approval doesn’t guarantee that you will be able to obtain a Square loan. Please know that your loan history is reviewed in determining loan eligibility, but there are other factors of your account that are also considered.

We understand that not receiving this loan can be frustrating and appreciate you providing your feedback. I will share your concerns about with the rest of the Square Financial Services team. Please know that we’re constantly working to improve our products and services based on the feedback we receive from customers. I have also escalated for a member of our Square Financial Services team to reach out directly via email within 5 business days to answer your questions. 

If you have any other questions, please feel free to contact us directly!

[FloresLiquor]

Dear Square Financial Team,

Thank you for your prompt response to my previous concerns. I truly appreciate your acknowledgment of my situation and the escalation for further assistance.

I am writing to formally accept the pre-approval offer of $29,000. I want to emphasize how crucial this loan is for the growth of my businesses, Flores Liquor and Liquor Town. For the past five years, Square’s repayment structure, particularly the automatic deduction of 15–20% from daily credit card sales, has been a critical part of how I manage my finances and ensure timely payments.

The recent change to a fixed monthly payment has not only impacted my ability to stay current but has also complicated my loan applications. As you noted, customer loyalty should be a factor in the loan approval process, especially for long-standing clients like myself.

    I hope that as you review my acceptance of this pre-approval, you will consider my history with Square, the significance of these funds for small businesses, and the circumstances that led to the delinquency on my Liquor Town loan.

       I have remained loyal to Square for five years, utilizing your services for two stores despite the high credit and debit card fees and disruptions to my business due to Square outages several times. It is my hope that Square values its loyal customers and will take proactive steps to support our growth rather than using unforeseen changes in the payment structure as grounds for denial.

    My Flores Liquor loan is now 81% paid. Should this application be declined due to the Liquor Town account status once again, I would be left with no choice but to explore alternatives that might better align with my business needs, where customer loyalty and account performance are prioritized.
     If necessary, I am willing to accept that Square could apply the approved loan amount from Flores Liquor towards the past due payment of Liquor Town. This would allow me to be current on the Liquor Town account and facilitate the approval of my Flores Liquor loan.

Thank you for your consideration, and I look forward to your prompt response regarding the approval of my loan.