Wanting a bit more clarification about Flex Loans versus Short Term Loans

[powerofliberty]

Hi. I have used Square for my business for the better part of 7 years now, and this year is the first time I have been offered a 120-day, short term loan instead of the typical Flex Loan that I have had done every year since I started using Square.

I paid my previous loan off early with a $1,000 final payment. While Square evaluates for various factors, I cannot help to wonder if this Short Term Loan offer is based upon the fact that I paid it off early (roughly would equate to being 2 months early). I know the Short Term loans are not exactly anything new, but this is just very strange and admittedly distressing. I do not want to have loan payback rates, processing fees, and instant transfer fees eating up more than 10% of my cash flow.

My transaction volume has not drastically changed, and I am only down 5% YoY and I have over $120,000 in processed payments this year.

Just trying to get a better understanding of the loan evaluation process here because the payback rates for short term loans are astronomical compared to what I normally see on a Flex Loan, even if the interest fees are coming in at $150 to $250 cheaper.

Can someone kindly provide me some insight?

[Minion]

Hey @powerofliberty 

I don't really have any special or privileged information Ed on this subject nor do I think anyone from Square will fully be able to share any "insight" on what causes certain things to be the way that they are. I only speculating from what I have read over the years. 

I think that they moved to this smaller type loan maybe to ease that on the sellers and reduce some liability on Square's end with a much shorter period.  Moving more toward emergency type lending rather than longer term type.  Maybe they got burned in the past too many times from people not repaying also?

As for the manual payment  again that one would be subjective.  A manual payment of I would say anything more than a couple hundred dollars would probably trigger something.  Manual payments I think will always be seen as a less than favorable in the algorithms eyes (my opinion).  Did it trigger the new loan type being offered to your account? It's a guessing game that only Square would know but aren't saying. 

You can get rid of that instant transfer fee though which I think just increased this year to almost 2% by doing manual transfers.  I only do manual transfers and my money is in my account the next business day like clockwork.