Square Capital (Square Loans) vs OnDeck: Which Lender Is Right for Your UK Business?
Raising working capital is one of the toughest recurring jobs in a UK business owner’s week. Since 2020, the market has become faster, more digital, and more data‑driven. Instead of waiting weeks for a “no” from a bank, many SMEs now get a decision in hours and funding within a day. Reports from the British Business Bank and UK Finance echo this shift toward short‑term, flexible facilities for everyday needs like stock, payroll gaps, and seasonal peaks.
Against that backdrop, two names crop up in conversations with founders again and again: Square Capital (Square Loans) and OnDeck. Both are quick. Both are designed for real‑world cash‑flow needs. But they take very different routes to get there. Square Loans are embedded inside the Square payments ecosystem, charge a single flat fee, and skim a small percentage from each card sale until the balance is cleared. OnDeck offers short‑term unsecured loans (and, in some markets, lines of credit) priced with interest and repaid by fixed daily or weekly debits.
This deep‑dive unpacks how each product actually works, what it costs, how fast money arrives, how to qualify, and where each lender best fits, using details drawn from the provided PDF. If you’d like a tailored short‑list for your company, our specialists at Funding Agent can compare live options and secure terms. Ready to explore? You can also start now with our simple enquiry form.
Square Loans vs OnDeck: Visual Comparison Dashboard
Explore how each lender differs on cost, repayment rhythm, speed, eligibility, and progress rules. Figures below illustrate patterns using examples from our analysis (Square: £10,000 + £1,325 flat fee; OnDeck: £50,000 for 12 months at 24% APR with 2% origination).
Product Line‑Up and Loan Terms: Square Loans vs OnDeck
Square Loans for UK Sellers
What it is: A working‑capital advance for existing Square payment users, priced as a single fixed fee instead of ongoing interest. Repayments are deducted automatically as a fixed percentage of your daily Square card sales. No traditional application path; offers appear in the Square Dashboard when your processing data qualifies. UK loans are offered to incorporated businesses; sole traders may see a cash‑advance variant.
Typical amounts and term: Offers scale to your Square processing volume. Global ranges run from micro amounts to mid six figures for top sellers. Repayment is flexible with sales, but Square requires the balance to be cleared within a maximum of 18 months, with a minimum progress requirement every 60 days. Many sellers finish in 6 to 9 months because busy days accelerate repayment.
Pricing: One flat fee agreed upfront. There is no interest rate, no compounding, and no late fees. The fee does not decrease if you pay early, and it does not increase if sales are slower, as long as you meet the minimum schedule and finish by 18 months. A representative example in the source shows a £10,000 loan with a £1,325 fee (total repay £11,325), which equates to a representative APR of about 18.45% over an 18‑month cap.
Repayment method: Automatic daily deduction of a fixed percentage of your Square sales, typically around the low‑ to mid‑teens. On days with no sales, no repayment is taken. Payments rise on busy days and fall on slow days, which cushions cash flow.
Eligibility and process: Invite‑only for active Square sellers. No outside credit score requirement and no long document pack. If an offer appears, you use a slider in the Dashboard to choose the amount up to the offered maximum, review the fixed fee and daily sales percentage, and accept online. Approvals are often instant; funding commonly lands the next business day (instant if using Square’s own account rail in supported markets).
OnDeck Business Loans (UK)
What it is: Short‑term unsecured business loans for limited companies. In some markets OnDeck also offers a revolving line of credit, but in the UK the core product is the term loan. Loans are priced with interest and may include a small origination fee. Repayments are fixed daily or weekly by Direct Debit from your business bank account.
Typical amounts and term: Term loans generally range from the low thousands up to the low‑to‑mid six figures, with common terms from 3 to 24 months. Many facilities sit at 6, 9, 12 or 18 months. Larger, well‑qualified firms may access the upper range; first‑time borrowers often start smaller and scale on renewals.
Pricing: Risk‑tiered interest. Best‑qualified firms may see rates in the high single digits to teens; mid‑tier pricing is commonly in the teens to twenties; higher‑risk profiles price higher. An origination fee (often 0 to 4 percent) may apply. There is no prepayment penalty; paying early reduces interest.
Repayment method: Fixed daily or weekly Direct Debit from your business bank account. The amount does not change with your sales volume. That creates discipline and a clear end date, but you must plan cash flow to meet payments during slow weeks.
Eligibility and process: Typical minimums include 12+ months trading, around £100k annual revenue, an owner credit profile around the mid‑600s or better, and a business current account. Application is online in minutes, with recent bank statements or an Open Banking connection, light KYC, and a soft credit check for pre‑qualification. Decisions often arrive the same day, with funding as fast as the same day once documents are signed.
Square Loans vs OnDeck: Pros & Cons
Square Capital (Square Loans)
Square Loans lives inside your Square till. You pay one flat fee. No interest. Square takes a small cut of each card sale until you’re done. Busy days clear more. Quiet days take less or nothing. Offers pop up in your Dashboard when you qualify. Funding usually lands the next working day. The catch? You can’t apply on demand, the fee never shrinks if you repay early, and the amount offered depends on your past sales.
Pros
- One fee. No interest. No late fees.
- Repay as you sell. £0 taken when you make £0.
- Fast. Accept in the Dashboard. Money next day.
- Low admin. No long forms. No piles of documents.
- No hard credit check advertised. No collateral in marketing.
- All in one place. See offers, balance, and repayments in Square.
Cons
- Invite‑only. No invite, no loan.
- Early payoff doesn’t cut the cost.
- Offer size tied to your Square volume.
- Usually one loan at a time.
- Only for businesses that use Square. UK loans focus on Ltd companies.
OnDeck (UK Term Loans)
OnDeck lends to UK limited companies. It’s a short‑term, unsecured loan. You pay interest. You repay a fixed amount every day or week by Direct Debit. The form is short. Decisions often arrive the same day. Funds can land the same day too. Pay early and you save interest. After good repayment, top‑ups and refis are common. The trade‑offs: higher APRs than banks, fixed debits that don’t flex with slow weeks, and a personal guarantee with a general lien.
Pros
- Open door for UK Ltd companies. No POS lock‑in.
- Larger loans than processor‑based offers.
- Same‑day decisions. Same‑day funding possible.
- No prepay penalty. Early payoff saves interest.
- Real support. A loan advisor. Options to top up or refinance.
- May report to business credit agencies (can help your profile).
Cons
- Fixed daily/weekly debits can bite in quiet weeks.
- Higher APRs than bank loans. Often a 0–4% origination fee.
- Personal guarantee and general lien are standard.
- More admin than Square’s invite. Bank data needed.
- Credit checks (soft to start; hard at signing).
Cost Comparison: What Will Your Loan Really Cost?
Square uses a flat fee with revenue‑linked repayments. OnDeck uses interest with fixed daily or weekly repayments. Both aim to be transparent, but the way cost behaves over time differs. With Square, the fee is fixed at the start and does not change with the speed of repayment. With OnDeck, interest stops when you repay, so paying early reduces total cost.
Worked Examples
Square Loans example: Borrow £10,000 with a £1,325 fee. Total repay £11,325. Repayment is taken as a percentage of daily Square card sales. If you are busy and clear the balance in 7 months, you still repay £11,325. If sales are slower and you take 12 months, you still repay £11,325, provided you meet the 60‑day minimums and finish by 18 months.
OnDeck example: Borrow £50,000 over 12 months at a simple illustration APR of 24 percent with a 2 percent origination fee (£1,000). You receive £49,000 net. Weekly repayments are fixed to amortise principal and interest over 52 weeks. If you repay in 8 months instead of 12, you save roughly one third of the scheduled interest.
Takeaway: If your revenue varies day to day, Square’s percentage‑of‑sales model shields cash flow. If you prefer a fixed timetable and want the option to reduce cost by paying early, OnDeck’s interest model may suit you better.
Real‑World Use Cases: Which Lender Fits Your Scenario?
Scenario 1: A café needs £12,000 for a patio build in spring
The café already takes all card payments through Square and expects stronger summer trade. Cash flow is lumpy week to week. The owner wants minimal admin and repayments that flex with takings.
Why Square Loans is the better fit
Square’s invite‑based offer appears in the dashboard. The owner selects £12,000, sees the one‑time fee and the daily sales percentage, and accepts in minutes. Funds arrive the next business day. During rainy weeks, the deduction is small; during sunny weekends, repayment speeds up. The owner never has to manage a fixed debit on a quiet Tuesday.
Scenario 2: A manufacturing firm needs £60,000 for raw materials
The company invoices clients and does few card transactions. Revenues are stable, and the firm can budget a weekly payment. The director wants an option to repay early if a big order closes.
Why OnDeck is the better fit
OnDeck accepts applications from any limited company that meets its criteria. A same‑day decision is typical. With a 12‑month term the business gets a clear weekly repayment plan, and if cash arrives early it can repay in month eight and save interest.
How to Qualify & Apply: Your Step‑by‑Step Guide
Square Loans: Application Process
- Process payments with Square regularly. Eligibility is assessed from your transaction history.
- Watch for an invite in your Square Dashboard. Offers are personalised and cannot be requested on demand.
- Choose your amount using the slider, review the fixed fee and daily hold rate, and accept online.
- Funds typically land the next business day. Repayments begin automatically as a percentage of daily sales after funding.
Square Loans: Eligibility Criteria
- Active Square payment user with sufficient processing history and stable sales patterns.
- UK incorporated business for loan product. A cash‑advance variant may apply for unincorporated merchants.
- No traditional credit score requirement in marketing; underwriting relies on Square sales data.
- One facility at a time; full repayment required within 18 months with minimum progress every 60 days.
OnDeck: Application Process
- Complete a short online form with company and director details.
- Provide recent bank statements or connect via Open Banking; a soft credit check is used to pre‑qualify.
- Review terms with a loan advisor if needed; e‑sign the agreement.
- Funding can arrive the same day by Faster Payments once contracts are signed.
OnDeck: Eligibility Criteria
- Limited company with at least 12 months trading.
- Annual turnover around £100,000 or more.
- Director credit profile in the mid‑600s or better is typical.
- Business current account; standard unsecured lending terms such as a personal guarantee and general lien.
Conclusion & Recommendation
Choose Square Loans if…
- You already process card payments with Square.
- Your daily revenue fluctuates and you want repayments to flex with it.
- You value ultra‑simple pricing and almost zero admin.
- You need quick, small to mid‑size working capital aligned to POS sales.
Choose OnDeck if…
- You are a UK limited company that does not use Square or wants a larger facility.
- You prefer a fixed timetable and the chance to save interest by paying early.
- You want a human loan advisor and the option to refinance or top up.
- You can plan cash flow to meet fixed daily or weekly payments.
Still unsure which route is right for your firm? Our team compares the UK’s leading SME lenders every day. We match your turnover, trading profile, and cash‑flow rhythm to the most suitable product and help you secure terms quickly. Start with Funding Agent or submit an enquiry form and we will guide you step by step.
