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Published By Janet Gershen-Siegel at May 8th, 2018
Because SquareTwo Financial no longer exists, this review has been updated to reflect more recent information. SquareTwo Financial sold its portfolio to Resurgent Holdings in 2017. This review was updated on May 11, 2020.
We reviewed the SquareTwo Financial online lender. But there are three rather similarly-named players online. We look at the specifics for all three. We did this in order to cut through the confusion. Here now is our SquareTwo Financial review.
SquareTwo Financial engaged in asset recovery. Their subsidiaries purchase charged off assets from banks and other financial institutions. And then they placed them for collection with SquareTwo’s branch offices.
According to Bloomberg:
“It also purchases Canadian consumer credit charged-off receivables. The company was formerly known as Collect America, Ltd. and changed its name to SquareTwo Financial Corporation in December 2009. SquareTwo Financial Corporation was founded in 1994 and is headquartered in Denver, Colorado.”
It used to be that SquareTwo Financial was located online here: www.squaretwofinancial.com. Their physical address was in Englewood, CO. You could call them at: (877) 304-0146.
Their website is currently not responding; so much of their basic information cannot be determined based on a simple check online.
SquareTwo purchased outstanding accounts receivables from companies. But a bankruptcy of course threw a monkey wrench into any company’s plans to work with them.
The company is currently (since March of 2017) restructuring under Chapter 11. Reuters says:
“SquareTwo reached an agreement with Resurgent Holdings LLC to take ownership of the debt collector’s portfolio of assets, with Resurgent agreeing to invest $405 million, according to the filing.
SquareTwo Chief Operating Officer J.B. Richardson said the proceeds from the agreement would result in a final purchase price of $264 million in exchange for 100 percent of the equity of the reorganized company.”
The SquareTwo Financial website did not list fees when it could last be checked.
Advantages are hard to find; the company was basically a collections agency.
Disadvantages included no transparency on fees. Also, they seem to be completely out of business, as even their website no longer responds. The company is allegedly in Chapter 11 restructuring.
But it is impossible to tell whether it will bounce back or if it is gone for good, or even if any other company will come in and buy the name or the company’s assets, or both. The SquareTwo Financial bankruptcy is currently ongoing. But there has been no news since the middle of 2017.
Another disadvantage is the similarity in names. It is easy to end up on the wrong site.
This company provides options to take payments on the go. They are a business capital provider, but it must be through a loan offer.
Square is located online here: https://squareup.com/. Their physical home address is in San Francisco, CA. Square Up has offices in Canada, Japan, the United Kingdom, Australia, and Ireland. Their CEO is Jack Dorsey, who also runs Twitter.
According to Square:
“Log in to your Dashboard to see if you have a loan offer. Application only takes a few clicks and there are no long forms to fill out or long waiting periods. All loans are subject to credit approval.”
Loan eligibility depends on a business’s history with Square. Square states:
“We look at many factors to determine where to extend loan offers. But generally, the more active you are on Square (and the more aspects of your business you run with Square), the more likely we are to offer you financing.”
Loans are through Square Capital. But see below.
Using performance as a part of the approval process for financing is a brilliant idea. For newer business owners, and for young adults, Square offers a chance to develop a reputation.
And if the business owner’s reputation at Square is a good one, then they will have a chance for approval.
In addition, getting an offer is effortless. All you have to do is be a good user of Square and you should become eligible (see above) and will get a notification in your dashboard. And that is a lot easier than trying to find a loan elsewhere.
For businesses with a smaller amount of processing volume, there won’t even be an opportunity to try to qualify. And that is true no matter how good a customer you are of Square.
An easy offer on a dashboard could potentially be a bit of a disadvantage in that we are all lovers of inertia. So if it is easier to just go with Square, a business owner might not shop around for financing. And if that is the case, they could be getting less favorable terms.
Or they might get less.
But either way, you are leaving money on the table.
The final disadvantage is the issue of names. The name ‘square’ is a good one, and it rather nicely mimics the look of some on-the-go payment methods you can use with a smartphone. Also, the term connotes fairness.
But it is such a good term that three similar companies all use it. For Square to stand out and for them to not lose business due to confusion, they might have to change their name.
Square Capital is the name of Square’s lending division.
Square’s lending arm is Square Capital. See: https://squareup.com/us/en/capital. Pay off your loan with automatic deductions from your Square daily card sales. Square just wants you to pay back in 18 months and hit a minimum every 60 days.
Fees are a fixed percentage of daily credit card sales. See: https://squareup.com/help/us/en/article/5978-square-capital-fees-oboslete.
Business credit is credit in a business’s name. It doesn’t link to an entrepreneur’s individual credit, not even when the owner is a sole proprietor and the solitary employee. Because of this, a business owner’s business and personal credit scores can be quite different.
Establishing business credit is a process, and it does not occur without effort. A business needs to actively work to build business credit. Nevertheless, it can be done readily and quickly, and it is much faster than establishing individual credit scores.
Vendors are a big component of this process.
Carrying out the steps out of sequence will result in repetitive denials. No one can start at the top with business credit. For example, you can’t start with store or cash credit from your bank. If you do, you’ll get a denial 100% of the time.
A business needs to be reliable to lenders and merchants. That is why, a business will need a professional-looking website and email address, with site hosting bought from a merchant such as GoDaddy.
Also company telephone and fax numbers must have a listing on ListYourself.net.
At the same time, the business phone number should be toll-free (800 exchange or comparable).
A company will also need a bank account dedicated only to it, and it must have every one of the licenses necessary for operation. These licenses all must be in the particular, correct name of the business, with the same business address and telephone numbers.
So keep in mind that this means not just state licenses, but potentially also city licenses.
Visit the Internal Revenue Service web site and obtain an EIN for the company. They’re free. Pick a business entity such as corporation, LLC, etc.
A business can get started as a sole proprietor. But they will more than likely wish to change to a kind of corporation or partnership to limit risk and maximize tax benefits.
A business entity will matter when it comes to tax obligations and liability in the event of litigation. A sole proprietorship means the entrepreneur is it when it comes to liability and taxes. No one else is responsible.
If you operate a business as a sole proprietor, then at the very least be sure to file for a DBA (‘doing business as’) status.
If you do not, then your personal name is the same as the company name. Consequently, you can end up being personally responsible for all business debts.
Plus, according to the Internal Revenue Service, using this arrangement there is a 1 in 7 probability of an IRS audit. There is a 1 in 50 chance for corporations! Avoid confusion and noticeably lower the chances of an Internal Revenue Service audit as well.
But never look at a DBA filing as being anything beyond a steppingstone to incorporating.
Begin at the D&B web site and obtain a cost-free DUNS number. A DUNS number is how D&B gets a business into their system, to generate a PAYDEX score. If there is no DUNS number, then there is no record and no PAYDEX score.
Once in D&B’s system, search Equifax and Experian’s web sites for the business. You can do this at https://www.creditsuite.com/reports/. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process.
By doing so, Experian and Equifax will have something to report on.
First you must build trade lines that report. This is also known as vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score.
And with an established business credit profile and score you can start obtaining retail store and cash credit.
These varieties of accounts have the tendency to be for the things bought all the time, like shipping boxes, outdoor work wear, ink and toner, and office furniture.
But first off, what is trade credit? These trade lines are credit issuers who will give you initial credit when you have none now. Terms are typically Net 30, rather than revolving.
Hence if you get an approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, like within 30 days on a Net 30 account.
Net 30 accounts need to be paid in full within 30 days. 60 accounts must be paid completely within 60 days. In comparison with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you used.
To launch your business credit profile properly, you should get approval for vendor accounts that report to the business credit reporting bureaus. When that’s done, you can then use the credit.
Then repay what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.
Not every vendor can help like true starter credit can. These are merchants that will grant an approval with marginal effort. You also need them to be reporting to one or more of the big three CRAs. They are Dun & Bradstreet, Equifax, and Experian.
Once there are 3 or more vendor trade accounts reporting to at least one CRA, then progress to retail credit. These are companies such as Office Depot and Staples.
Use the business EIN on these credit applications.
Are there more accounts reporting? Then move onto fleet credit. These are businesses such as BP and Conoco. Use this credit to buy fuel and fix and take care of vehicles. Make certain to apply using the business’s EIN.
Have you been responsibly managing the credit you’ve up to this point? Then move onto more universal cash credit. These are businesses like Visa and MasterCard. Keep your SSN off these applications; use your EIN instead.
These are normally MasterCard credit cards. If you have more trade accounts reporting, then these are in reach.
Know what is happening with your credit. Make sure it is being reported and address any mistakes as soon as possible. Get in the practice of checking credit reports. Dig into the specifics, not just the scores.
We can help you monitor business credit at Experian and D&B for 90% less. Update the relevant information if there are inaccuracies or the relevant information is incomplete.
So, what’s all this monitoring for? It’s to contest any mistakes in your records. Errors in your credit report(s) can be taken care of. But the CRAs often want you to dispute in a particular way.
Disputing credit report mistakes generally means you mail a paper letter with copies of any evidence of payment with it. These are documents like receipts and cancelled checks. Never mail the original copies. Always send copies and keep the original copies.
Fixing credit report mistakes also means you precisely itemize any charges you contest. Make your dispute letter as understandable as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you sent in your dispute.
Always use credit sensibly! Don’t borrow more than what you can pay off. Keep track of balances and deadlines for payments. Paying off promptly and in full will do more to raise business credit scores than nearly anything else.
Establishing business credit pays. Excellent business credit scores help a business get loans. Your loan provider knows the business can pay its financial obligations. They know the business is bona fide.
The business’s EIN connects to high scores, and lending institutions won’t feel the need to require a personal guarantee.
Business credit is an asset which can help your business for many years to come.
It does not appear as if SquareTwo or some unknown possible successor company ever survived Chapter 11. At the time of updating this post, that seemed to be highly unlikely.
Therefore, we don’t just recommend you not work with SquareTwo. It is virtually impossible to do so, even if you wanted to.
But Square is another story. Seriously consider them for your funding. You will do best with Square if you use their payments system in your business religiously.
And finally, as with every other lending program, whether online or offline, always be sure to read the fine print. And do the math.
Go over the details with great care and decide whether any option will be good for you and your company.
In addition, consider alternative financing options that go beyond lending. These include building business credit. This is in order to best decide how to get the money you need to help your business grow.
Today, we want to hear from our audience! Share your voice with us about your experiences with online lenders. And please be sure to pass along our SquareTwo Financial review.