Square‘s core business, providing credit card processing to small businesses, means it knows all about their revenue. It has built a cash advance operation based on that knowledge, and today it is announcing an expansion.

The financial startup has unveiled a deal with Chicago-based Victory Park Capital that will extend hundreds of millions of dollars to Square Capital. Victory Park specializes in providing financing for small- and middle-sized businesses.

“This speaks to the value of Square’s data, which provides a unique [understanding of these small businesses] that others don’t have,” a Square spokesperson told VentureBeat. “We’re in a unique position, able to see money coming in and going out, so we don’t need to spend months” like banks do to assess the risk.

The new funding will allow Square to “reach out” to more merchants, she said. To date, Square has invested $50 million of its own money in the program and says it has assisted more than 10,000 merchants.

Before Square Capital was launched, participating small businesses told Square that they wanted access to small amounts of funds to help with cash flow, without going through bank applications that could take up to a year — after which they still might not get the money, the spokesperson said.

Square also said the businesses wanted a fixed payback amount, and they preferred to pay back less when revenue was down instead of a fixed amount each month.

The resulting Square Capital program, which began as a pilot last year and was officially announced in May, provides several specific choices to a participating merchant.

Logging onto their account, the merchant might see, for instance, the possibility of $4,000, $7,000, and $10,000 in cash advance choices. Payback totals for those amounts might be, as an example, $4,560, $7,980, and $11,000 respectively.

Payback is through a percentage of the merchants’ credit card receipts to Square, such as 10 percent. If business is very good, Square might increase payback within its terms. Payback is based on revenue, so there is no set payback time.

“Every offer is unique, based on a variety of factors,” the spokesperson said, including the business’ history with Square, processing volume, and growth. Costs average 10 to 14 percent of the advance, but a merchant “can’t mix and match their options,” she told us. Square generates three unique offers, and the merchant can choose one or not. Most amounts are under $10,000, but there is no official maximum.

Some Square-watchers have contended that, since payback might be accelerated if a merchant is having a great month, the effective cost of the money — compared to the annual percentage rate (APR) of a loan — could be the equivalent of, say, a 28 percent interest rate over a six-month period or even a triple digit rate if paid back in one very good month.

But Square says this is the wrong way of looking at the program. “It’s not a loan,” the spokesperson told us, because there is no set payback period. “It’s an advance” against future sales, she said.

Instead, Square sees this as a cash product. You buy the product, which happens to be $10,000, for $11,000, and then you pay it back as a percentage of your proceeds. The price of the product remains the same, and, if your business takes a dive through the summer months, your payback amount drops accordingly.

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