Square has launched Square Capital, a credit program for small business, joining a growing number of companies breaking into small-business lending.

The program closely resembles PayPal's Working Capital, in that it allows merchants to pay back loans from the sales they handle through the payment provider and lending decisions are based on a merchant's transaction history. Square offers loans to businesses with the expectation that they will repay in about 10 months, though there is no firm timeframe for repayment.

Other rivals in the increasingly crowded small-business lending market include Fundbox, which launched last month with $17.5 million in funding from Khosla Ventures and other investors; Kabbage, which received $270 million in financing from institutional investors in April; and OnDeck, which received $77 million in new funding in March.

SmartBiz, another contender, announced four new distribution partners in March. Peer-to-peer lenders such as Dealstruck and Lending Club are also active in small-business loans.

Square Capital does not include an application process, and businesses can get money as soon as the next day. Square Capital's fees are tailored to each merchant. In one example, a merchant receiving a $10,000 loan would repay $11,000 at a rate of 10% of each day's card sales.

In a pilot of Square Capital, thousands of sellers used the program to buy equipment and inventory, hire staff and open new stores. "We got our money quickly and the ease of automatic payments allowed us to focus our time and energy on serving great coffee to our customers," says Caroline Bell, owner of Cafe Grumpy in New York, in a May 28 press release.

Square has made a number of additions to its merchant services, including several that offer new opportunities for the San Francisco company to increase its revenue beyond the 2.75% it charges for swiped card payments. Its new Square Feedback product, an interactive digital receipt, comes at a cost of $10 a month. An order-ahead service called Square Pickup, which launched last month, charges an 8% fee.