I recently received this option as well.

Although I suppose the generic answer is that they want to verify the legitimacy of the business, verify that it's being managed well, that it's not involved in suspicious activities, etc. before they lend out more money, the Terms give some interesting details.

If you accept the offer, they can see everything that goes on in the bank account, what accounts and banks you're sending payments to, what businesses and individuals you're receiving or sending money from and to, etc. Accepting the terms gives them permission to offer to sell you other products based on that activity, or to sell your contact info to someone else who would like to sell you certain products based on your account activity. (I don't believe Square can actually provide them with the transaction info however, but rather something like "here is a list of people who spend over $x a month on cleaning supplies".) Agreeing to the offer would also give them permission to have one or more unnamed third parties do all of this on Square's behalf. So who knows who at what companies would be digging through your business transactions.

Even though all of this can sound pretty intrusive, even a bit dangerous, apparently it is quite standard for getting a loan. If you were to apply for a loan through your bank, they'd be doing the same thing. (Although, since they can probably already see everything that goes on in your account with them, the sense of intrusion would be less.)

I wouldn't blame anyone for deciding to pass on the offer. Personally I haven't accepted it yet, and doubt that I will.