San Francisco, CA — Square, a division of Block, Inc., has officially announced the launch of its innovative "Expansion Capital" financing option, developed in partnership with Homegrown. This new program is specifically tailored to empower eligible multi-location sellers within the Square ecosystem, providing them with a streamlined and flexible pathway to growth. The pilot program, which commenced with a substantial commitment of $24 million in capital, offers financing amounts up to $1 million with repayment terms extending up to four years. A cornerstone of the program’s design is its adaptive payment structure, which flexes based on a business’s monthly revenue, thereby mitigating cash flow pressures. Crucially, the Expansion Capital initiative is distinguished by its non-dilutive nature, meaning no equity stake is required from business owners, and it eliminates the need for personal guarantees. This bespoke financing solution is meticulously crafted to meet the specific needs of established operators poised for their next growth phase, whether that involves opening a new location, acquiring an existing site, or undertaking significant remodels.
The introduction of Expansion Capital represents a significant evolution in Square’s commitment to fostering small business growth, particularly for those enterprises that have already demonstrated market viability and are ready to scale. For years, Square has been at the forefront of providing accessible financial tools, from payment processing to its earlier Square Capital lending offerings. This new venture, powered by Homegrown’s specialized underwriting expertise, integrates seamlessly into Square’s existing suite of seller services, allowing qualified businesses to access critical funding without the often-cumbersome process of engaging with traditional external lenders. The inherent flexibility in repayment, ranging from 1% to 6% of monthly revenue, is a direct response to the dynamic nature of multi-location businesses, which frequently experience seasonal fluctuations or varying performance across different sites. This stands in stark contrast to conventional fixed-schedule loan products, offering a vital buffer during slower periods and aligning repayment obligations more closely with a business’s actual capacity.
A Strategic Alliance Addressing a Critical Market Gap
The partnership between Square and Homegrown is strategically positioned to address a persistent challenge faced by scaling small businesses: access to expansion-stage capital that aligns with their operational realities. Traditional financial institutions often impose stringent requirements, demand personal guarantees, or offer inflexible repayment schedules that can strain growing businesses. Moreover, for many successful entrepreneurs, the prospect of ceding equity through venture capital funding is undesirable, particularly for those who have meticulously built their businesses independently. Expansion Capital directly tackles these hurdles.
Square, founded in 2009 by Jack Dorsey and Jim McKelvey, initially revolutionized payment processing for small businesses through its ubiquitous white card readers. Over the past decade and a half, the company (now Block, Inc.) has systematically expanded its offerings to create a comprehensive business ecosystem. This includes point-of-sale systems, payroll management, banking services through Square Banking, and crucially, small business lending through Square Capital. Launched in 2014, Square Capital has disbursed billions of dollars in funding to hundreds of thousands of small businesses, primarily based on their Square sales data, offering a quick and data-driven alternative to traditional bank loans. The average loan size from Square Capital historically has been smaller, typically aimed at working capital needs or minor equipment upgrades. Expansion Capital marks a deliberate move towards larger, longer-term funding specifically for scaling and significant growth initiatives.
Homegrown, on the other hand, brings specialized expertise in underwriting growth-stage brick-and-mortar businesses. Their focus on the specific nuances of multi-unit operations, understanding the metrics that indicate successful expansion potential, complements Square’s vast trove of transactional data and its deep relationships with millions of sellers. This synergistic approach allows for a more accurate assessment of risk and potential, enabling the provision of larger capital sums with terms uniquely suited to multi-location growth. Michael Davis, CEO and Founder of Homegrown, emphasized the significance of this collaboration, stating, "So much of America’s small business economy runs on Square. This partnership brings a new type of expansion capital to brick-and-mortar entrepreneurs across the country, and that’s a meaningful moment for both teams." His remarks underscore the potential for this program to impact a vast segment of the economy, given Square’s extensive merchant base.
Key Features and Unprecedented Flexibility
The design of Expansion Capital is meticulously crafted to provide maximum benefit and minimum burden for growth-stage operators:
- Flexible Repayments: The program’s standout feature is its dynamic repayment model, where payments adjust between 1% and 6% of monthly revenue. This mechanism directly addresses a critical pain point for businesses that experience seasonal peaks and troughs, or those with varying performance across multiple locations. Unlike fixed monthly payments that can become onerous during slower periods, this adaptive structure ensures that repayment obligations align with the business’s current financial health, significantly reducing cash flow pressure and the risk of default. This innovative approach reflects a deeper understanding of real-world small business operations.
- Non-Dilutive Capital: For many entrepreneurs, maintaining full ownership and control of their business is paramount. Expansion Capital offers non-dilutive financing, meaning business owners do not have to sell equity or give up ownership stakes to secure funding. This is a crucial distinction from venture-backed funding routes, which, while offering significant capital, often come with demands for board seats, strategic control, and a dilution of the founder’s ownership. This feature allows businesses to grow while preserving the vision and independence of their founders.
- No Personal Guarantees: A common requirement in traditional business lending, personal guarantees expose an entrepreneur’s personal assets to business debt. The elimination of personal guarantees in Expansion Capital significantly de-risks the expansion process for business owners, allowing them to pursue growth opportunities with greater confidence and less personal financial vulnerability. This aligns with Square’s long-standing philosophy of making capital more accessible and less intimidating for small business owners.
- Substantial Funding and Extended Terms: With amounts up to $1 million and terms up to four years, Expansion Capital provides the substantial funding necessary for significant growth initiatives. This scale of capital is often difficult for small businesses to secure through conventional channels without extensive collateral or complex application processes. The extended repayment period also allows businesses ample time to realize a return on their investment from the expansion, rather than being pressured by short-term repayment demands.
Who Qualifies and What the Program Covers
The Expansion Capital program is precisely targeted, not at nascent startups, but at proven Square operators who have already established a solid foundation. Eligibility requires businesses to have two or more locations, indicating a track record of successful operations and a demonstrated ability to replicate their business model. The program caters to a diverse range of brick-and-mortar sectors, including coffee shops, fitness studios, restaurants, beauty and wellness brands, and neighborhood retailers. These are businesses that have successfully navigated the initial stages of development and are now looking to capitalize on proven market demand by expanding their footprint.
The flexibility extends to the deployment of the capital itself. Eligible sellers can utilize the funds for a variety of strategic growth initiatives:
- Opening a Next Location: This is a primary use case, enabling businesses to expand their geographical reach, tap into new markets, or increase their overall operational capacity.
- Acquisition of a New Site: For businesses looking to grow through mergers or acquisitions, the capital can facilitate the purchase of an existing business or property, potentially accelerating market entry or consolidating market share.
- Funding a Remodel: Significant remodels can revitalize existing locations, improve customer experience, increase operational efficiency, or expand service offerings. This capital can support such investments, ensuring existing sites remain competitive and profitable.
This broad range of permissible uses highlights the program’s understanding that growth strategies are varied and require adaptable financial support.
The Broader Context: Square’s Vision for Small Business Finance
Andrea Raj, Square Banking’s Head of Product, articulated Square’s enduring commitment to its sellers. "At Square, we’ve spent over a decade making sure local business owners have access to capital on fair terms," Raj stated. "Partnering with Homegrown to provide sellers with a new capital option is about extending that same commitment to a new stage of growth: the moment a seller is ready to take it further." Her remarks emphasize that Expansion Capital is not merely a new product but a natural extension of Square’s overarching mission to democratize financial services for small businesses.
This commitment is particularly relevant given the persistent challenges small businesses face in accessing capital. Data from the Small Business Administration (SBA) and various economic reports consistently show that traditional bank lending to small businesses has tightened over the past decade, especially for amounts under $250,000, and even more so for businesses seeking expansion capital without significant collateral. Fintech companies like Square have stepped in to fill this gap, leveraging technology, data analytics, and streamlined processes to offer more accessible and efficient funding solutions. Square’s massive ecosystem provides it with a unique advantage: it possesses real-time sales data, transaction history, and operational insights for millions of businesses, enabling highly informed and rapid underwriting decisions that traditional banks, often reliant on historical financial statements and extensive paperwork, cannot match.
The timing of this announcement, May 28, 2026, positions Square to further solidify its role as an indispensable partner for businesses not just in their day-to-day operations but also in their strategic expansion. As the economy continues to evolve, characterized by both opportunities and uncertainties, flexible financial solutions become increasingly vital for sustained growth.
Implications for the Small Business Landscape and Beyond
The launch of Expansion Capital carries significant implications for various stakeholders:
- For Square (Block, Inc.): This program deepens Square’s relationship with its most successful and growing merchants. By providing crucial expansion capital, Square strengthens its position as a holistic financial services provider, fostering greater loyalty and reducing churn among its high-value sellers. It also creates a new, potentially high-margin revenue stream, further diversifying Block’s financial ecosystem. The ability to retain businesses as they scale, rather than losing them to traditional lenders or venture capital firms, is a strategic imperative. Furthermore, the data generated from these expansion loans will provide Square with even richer insights into the growth trajectories and financing needs of successful multi-location businesses, informing future product development.
- For Multi-Location Businesses: For entrepreneurs running successful coffee shops, fitness studios, or retail chains, Expansion Capital offers a tailored solution to unlock their next phase of growth. It provides a viable alternative to the often-onerous processes of traditional banks or the equity dilution required by venture capital. This access to flexible, non-dilutive capital can accelerate growth, facilitate job creation, and allow businesses to respond more rapidly to market opportunities. It empowers proven operators to take calculated risks on expansion without jeopardizing their personal finances or relinquishing control of their ventures.
- For the Small Business Lending Market: Square’s Expansion Capital program, particularly its flexible repayment model and non-dilutive nature, could set a new benchmark for fintech lenders and even prompt traditional banks to re-evaluate their offerings for growth-stage small businesses. It highlights the power of data-driven underwriting and customer-centric product design in a sector often criticized for its rigidity. This innovation could spur further competition and lead to more diverse and accessible financing options across the entire small business lending landscape.
- Economic Impact: When successful multi-location businesses expand, they create jobs, stimulate local economies, and contribute to overall economic growth. By removing financial barriers to expansion, Expansion Capital can indirectly foster entrepreneurship, innovation, and community development. The pilot program’s initial $24 million commitment, while significant, is likely just the beginning, with potential for widespread adoption across Square’s vast merchant network.
In conclusion, Square’s Expansion Capital program, in collaboration with Homegrown, represents a forward-thinking initiative designed to empower proven multi-location businesses with the flexible, non-dilutive capital they need to scale. By leveraging Square’s extensive merchant data and Homegrown’s specialized underwriting expertise, this program fills a critical gap in the small business lending market, reinforcing Square’s position as a comprehensive financial partner for businesses at every stage of their journey. As the pilot expands, it is poised to significantly impact the growth trajectory of brick-and-mortar entrepreneurs across the country, fostering economic development and setting new standards for accessible and adaptable business financing.
