by Ben Dwyer Fundbox is a startup that offers working capital options for businesses through invoice financing or lines of credit.
Invoice financing is a popular method of obtaining short-term business capital to run your business. Fundbox offers both invoice financing and traditional business lines of credit. While these types of loans carry large fees, they can be a great short-term financing option for businesses with bad or no credit.
If you’re looking for working capital, this FundBox review covers everything you need to know about your options through Fundbox.
Who Is Fundbox?
As mentioned above, Fundbox is a San Francisco-based financial technology company. It was founded in 2013 by Eyal Shinar, Tomer Michaeli, and Yuval Ariav. It uses big data analytics and predictive modeling to provide small businesses and freelancers with different funding options.
The company raised over $107.5 million in funding from investors like Khosla Ventures, Blumberg Capital, General Catalyst Partners, and Amazon owner Jeff Bezos. It has an A+ rating with the Better Business Bureau and a nearly 5-star review rating.
In fact, Fundbox has generally positive customer reviews across the Internet. The handful of negative reviews center around the company either overcharging after payoff, rejecting a business, or offering too low of a credit line. These bad reviews appear to be more the exception than the rule, though, and the vast majority of customers seem happy with the service.
Financing Options
Fundbox offers two major financing options: invoice financing and lines of credit.
Invoicing Financing
The invoice financing option provides loans for 100% of invoice values from $1,000 to $100,000 at for a fee of 0.4% to 0.7% per week. This comes out to an APR between 16.4% and 76.5%. Repayment terms are weekly for either 12 or 24 weeks. There are no origination, maintenance, or termination fees. If you pay the loan off early, you do not need to pay the full-term interest.
There are no minimum requirements for revenue, credit score, or business age, as the loans are based on invoices. To prove these invoices, however, you’ll need to have at least three months of activity in an online accounting or bookkeeping platform. Fundbox integrates with major systems such as FreshBooks, Harvest, Jobber, QuickBooks, PayPal, Sage One, Xero, and more.
You can choose which invoices to finance, and the fee charged is based on the risk and probability of repayment.
Lines of Credit (Direct Draw)
Fundbox’s direct draw are revolving lines of credit between $1,000 and $100,000 with an interest rate of 0.5% to 0.7% per week, which equates to an APR between 15% and 59%. There are no origination, withdrawal, money transfer, or early payoff fees. If you pay off the loan early, you do not need to continue paying the interest.
To qualify for a direct draw loan, you need to have been in business for at least six months with annual revenue of at least $25,000. Your credit score isn’t a factor – instead, you’ll need to connect your business bank account and show at least three months of activity. Fundbox is compatible with over 24,000 banks and credit unions. The company also has a calculator on its site to show what amount you may be eligible for.
Fundbox does not place a lien on your business, and it does not report to credit agencies. Its proprietary algorithms determine your creditworthiness based on the financials of your accounting software or bank account.
Fundbox also offers a Flex Pay option with the line of credit account. You’ll have three days to pay off a bill or expense with no fees. After the three day mark, the withdrawal/payment counts as a draw on your credit line and will be charged accordingly.
How Do I Apply for Fundbox?
Applying for Fundbox is an easy online process. Fill out the application form with your name, business email, phone number, and then link your account. For direct draw you’ll need to link a bank account. For invoice financing, you’ll need to link accounting software. From that point, Fundbox will evaluate your business financials and notify you of its funding decision within a couple of hours.
Fundbox automates the entire process based on the company’s big data analytics and predictive modeling technology. The company does not run a credit check during the application process. However, if you apply for a limit increase, it may perform a hard credit check.
Once approved, the company disburses funds to your bank account within 2 business days, although your bank may hold the funds longer.
If a scheduled repayment is missed, declined, or returned, it’s moved to the end of your repayment schedule, extending the term length and accruing an additional late fee of $1 plus an ACH insufficient funds fee.
Fundbox Alternatives
Fundbox is a great way for freelancers, solo entrepreneurs, and small businesses to receive funding. However, if your business is larger (or has contracts with major businesses or the government), or holds a lot of assets, there are other options available.
Paragon Financial Group – Paragon Financial Group offers a variety of similar financing options, including non-recourse invoice factoring, invoice financing, purchase order financing, and non-recourse government contract factoring. This makes it a great option if you do business with government agencies or major businesses like GM or Walmart. Business revenue needs to be at least $25,000 per month to qualify.
StreetShares – StreetShares is a veteran-owned business founded for veterans (although you don’t need to be a veteran to use it). It’s a P2P lending platform that offers business loans, lines of credit, and contract financing. This service is great if you have guaranteed contracts (mostly issued by government agencies) and can fund up to 90 percent ($500,000) of a $555,555 contract up front.
Conclusion
Fundbox is pricier than taking out a small business installment loan from a bank or the SBA. However, if you have bad credit and need cash fast, it can be a great option. It’s one of the rare business financing options that has glowing online reviews from customers. This is a great sign of a better chance at a positive experience with its financial products.
