In a bid to further diversify its business, Square is piloting a service that makes a lump-sum loan to merchants in exchange for a cut of future sales plus a fixed fee, according to Re/code.

The area of so-called merchant cash advances is controversial and outside existing regulation for loans. Such advances can be a last, desperate move for a business that is struggling.

The m-payments firm is currently running a pilot of the new service called Square Capital, which is also its latest attempt to diversify from its core business of handling payments for small retailers.