If you use Clover’s payment processor, you may have seen an offer come through via email or your Clover dashboard that asks you to see if you’re pre-qualified for Clover Capital. It may seem like a convenient, accessible way to secure the capital your business needs to grow and thrive. Now, you’re trying to find out if this offer is legit or just get more details.
Here, I’ll walk you through everything I know about Clover Capital so that you can decide if it’s the right funding option for your business. We’ll look at what it is and peek behind the scenes at the company, how it works, and answer some common questions.
This is what’s in store:
- What is Clover Capital?
- How Does Clover Capital Work?
- Frequently Asked Questions
- Conclusion: Is Clover Financing Legit?
Now, let’s jump in!
What is Clover Capital?
Clover Capital is a financing option advertised to help businesses access funds quickly by leveraging their future credit and debit card sales. It’s not exactly a loan; rather, it’s an advance based on your projected sales.
The process is straightforward: you apply, get approved within 1-2 business days, and receive the funds in 2-3 business days. The payments are then automatically deducted from your daily card sales, making it convenient and flexible—when sales are up, you pay more; when they’re down, you pay less.
To qualify, your business typically needs to be at least six months old with a minimum monthly processing volume of $1,000 over the past three months.
Once approved, you can use the funds for various business needs like:
- Inventory
- Equipment upgrades
- Hiring staff
- Marketing initiatives
A capital advance can pay for pretty much anything that can fuel business growth.
The process is quite streamlined: apply online, choose the best offer presented, get funded, and then enjoy the automated repayment process.
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What Percentage Does Clover Capital Take?
For Clover Capital repayments, the daily withholding percentage is determined by your credit card sales volume—it typically falls within a range of 8% to 15%.
So, you’ll pay more during periods of strong sales and less during slower periods.
How Much Does Clover Capital Cost?
Factor rates are used instead of traditional interest rates in merchant cash advances like Clover Capital. They are fixed amounts that do not compound over time, unlike interest rates.
The specific factor rate assigned to a business is influenced by the:
- Business’s risk profile
- Amount of the advance
- Expected repayment period.
According to CardPointe (an integrated payment terminal solution that provides support for Clover Flex and Clover Mini terminals), the factor rate for Clover Capital generally falls around 1.29, varying within a range of 1.10 to 1.29. Essentially, if you receive funding of $10,000 with a factor rate of 1.29, the total amount to be repaid would be $12,900 (10,000 x 1.29).
Something interesting I noticed is that the borrower review on the Clover Capital landing page notes that without Clover Capital they would use their credit card, which they wanted to evade.
The average interest rate on a credit card is 21.47%, according to the Federal Reserve, while community banks and credit unions offer lower rates (in my experience). Plus, you only have to worry about credit card interest if you carry a balance.
Depending on the repayment strategy and payment amount, a credit card with a 21.47% interest rate and consistent, higher-than-minimum payments could potentially be cheaper than a factored loan with a 1.29 factor rate—It’s important to calculate and compare the total costs under different scenarios to determine the most cost-effective financing option based on your financial situation and repayment capabilities.
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Company Overview
Clover, technically Clover Network Inc., is a private, for profit, California-based business that was founded in 2010 by John Beatty, Kelvin Zheng, Leonard Speiser, Mark Schulze. The company is incorporated in Delaware, which is known for being corporate-friendly.
According to the California Secretary of State, the company was re-registered as Clover Network LLC in 2024—This raised a red flag, so I dug around to see if I could find out why this might have happened.
First, I found a class action lawsuit against Clover Network LLC, in which the company agreed to pay $15 million for soliciting services to phone numbers on the National Do Not Call Registry. Claim recipients would get about 60 bucks each.
Then, I uncovered several other lawsuits in various stages—The legal claims against Clover Network Inc and Clover Network LLC involve patent infringement and other intellectual property claims.
One of the original co-founders, John Beatty, is Clover’s current CEO. Prior to launching Clover, Beatty was part of a handful of engineering and entrepreneurial ventures. None of his prior history seem to relate to payment processing, but instead technology.
According to Glassdoor, Clover isn’t the best company to work for. Only a minority would recommend the company to a friend and even fewer approve of the company leadership. Staff opinions tell a lot about a company’s internal ethics and standards.
Even more importantly, customer views speak to the level of support and transparency that a company provides. Clover POS has a 3.6-star rating on the Trustpilot platform, which isn’t great.
I couldn’t find an active Better Business Bureau profile for Clover, so I don’t know about recent complaints that may have been made on that platform. However, I did find that Clover’s parent company, Fiserv, has a 1-star rating, which is a bit of a red flag.
For the most part, Clover Network’s customers and staff are dissatisfied with the company. However, some people love the company, and experiences vary greatly.
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How Does Clover Capital Work?
Clover Capital works by providing businesses with quick access to funds based on their future credit and debit card sales—It operates as a merchant cash advance rather than a traditional loan.
Here’s how it generally works.
1. No Hard Credit Pull
One of the perks of Clover Capital is that it won’t impact your credit score because there’s no hard credit pull to your personal or business credit. Clover doesn’t run your credit—This allows you to explore financing options without worrying about potential credit score decreases or leaving marks on your credit reports.
Instead of focusing solely on credit history, Clover Capital considers factors like your business’s processing history and sales volume to determine funding eligibility. This approach provides you with accessible financing while protecting your credit scores from unnecessary inquiries.
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2. No Personal Guarantee
With Clover Capital, there is no personal guarantee required—This means you aren’t personally liable for the business debt. Typically, in business financing, a personal guarantee requires the business owner to be responsible for repayment if the business cannot fulfill its obligations.
With Clover Capital, the absence of a personal guarantee gives you an added layer of protection. In the event the business experiences difficulties and cannot repay the funding, the obligation remains with the business entity itself rather than extending to your personal assets or credit.
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3. Quick Funding
Once your application is submitted with the required documents, Clover Capital aims to provide approval swiftly, often within 1-2 business days. This quick approval process enables you to access the funds you need promptly to address immediate financial needs or capitalize on growth opportunities without unnecessary delays.
Overall, the combination of streamlined documentation requirements and expedited approval timelines makes Clover Capital a handy option for businesses seeking timely access to working capital.
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4. Fixed Loan Costs
Clover’s fixed loan cost, represented by a factor rate, offers several benefits to businesses:
- It provides predictable repayment terms, allowing for easier budgeting and financial planning without surprises from fluctuating interest rates.
- The transparent terms of the fixed loan cost ensure clarity in pricing, making it easy for you to understand the total repayment amount and assess affordability.
- Payments are flexible and adjust based on daily credit and debit card sales, making it easier to manage during slower sales periods.
Overall, Clover’s fixed loan cost provides you with a transparent, predictable, and flexible financing solution tailored to your needs.
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5. Automatic Repayment
Automatic Repayment with Clover Capital streamlines the repayment process, making it convenient and hassle-free. Once approved, a percentage of your daily credit and debit card sales is automatically deducted to repay the loan. This ensures consistent payments aligned with your business’s cash flow.
However, this feature comes with a caveat: you need to use Clover POS (Point of Sale) to facilitate the loan repayment. Using Clover POS integrates the repayment process seamlessly into your daily business operations, but it requires businesses to utilize Clover’s POS system for payment processing to benefit from automatic repayment.
This comes with a caveat…you need to use Clover POS to repay the loan. This could be a deterrent, particularly if you’re not already using their payment platform.
6. The Clover Go® App
The Clover Go app is a mobile point-of-sale (POS) for small businesses. It enables you to accept credit cards, signature debit cards, and other payment forms directly on your mobile device(s). With Clover Go, you can process transactions securely and conveniently on the go.
Key features of the app include:
- Credit card, signature debit card, and other payment method acceptance.
- Real-time sales tracking to remotely monitor transactions and performance.
- Business management functionality accessible from anywhere.
Users have rated Clover Go highly, with 4.6 stars on the Google Play store and 4.8 stars on the iOS marketplace. With Clover Go, you can accept payments, monitor sales, and manage operations from virtually anywhere.
Frequently Asked Questions
What is the difference between Square Capital and Clover Capital?
Square Capital offers business loans to eligible Square merchants, with repayment tied to daily Square sales. Clover Capital, on the other hand, provides merchant cash advances based on future credit and debit card sales for businesses using Clover POS systems.
How long does Clover Capital take to process?
Clover Capital typically processes applications in 1-2 business days after receiving all required documentation. Funding is usually disbursed within 2-3 business days after approval.
Conclusion: Is Clover Financing Legit?
Now, to answer the ultimate question: Is Clover worth it for small business?
Clover Capital is a cash advance offer from a legitimate company that’s registered and actively operating. However, I never recommend that a small business seek cash advance funding unless there is absolutely no other option — the fees are just too high. And, after you sprinkle a few legal allegations on top, I couldn’t in good conscience make a recommendation for Clover Capital.
Instead, I would recommend you shop around and explore all of your business funding options and choose the financing that aligns best with your needs and goals.
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