Square is currently testing short-term loans with around 1,000 users with its peer-to-peer payments solution Cash App. It is currently offering loans in amounts between $20 and $200, according to a press release.

Users who receive these loans will need to pay it back in four weeks, along with a flat fee of 5%(an APR of 60%). If users do not pay off the loan after four weeks, they'll get an additional one-week grace period, then Cash App will start adding 1.25% non-compounding interest each week. Customers won't be able to take out an additional loan if the previous one is defaulted.

"We are testing new features in Cash App, and recently began testing the ability to borrow money with about 1,000 Cash App customers," a company spokesperson said in the release. "We look forward to hearing their feedback and learning from this experiment."