Square has been busy building up cash reserves for its small business cash advancement program.

The new financing comes from three investors, including Colchis Capital and existing investor Victory Park Capital. A spokesperson for Square says the deal will add hundreds of millions of dollars to the program in addition to Square’s own investment.

Last month, Square Capital doled out nearly $25 million in cash advances to its customers. If it keeps up that pace, the company will have advanced $300 million to small businesses by the end of 2015.

Yesterday, PayPal announced that it had loaned $500 million to small businesses in the past 18 months. Like PayPal, Square benefits from an existing base of customers that can tap into its platform when they need cash. With its host of small business tools, Square has the added bonus of being able to know which businesses are most capable of returning the cash they owe to Square.

Square’s numbers lag a bit behind peer-to-peer lenders like Lending Club, which delivered $1.63 billion in loans last quarter. However, Lending Club has been around since 2007, while Square Capital is not quite a year old. Square doled out roughly $100 million in its first year. Neither Lending Club nor OnDeck Capital started delivering that amount of money until three and four years after their launch, respectively. At this rate, Square Capital has the potential to be a formidable competitor to peer-to-peer lenders and others over the next few years.

VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative enterprise technology and transact. Discover our Briefings.