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How to Get a Small Business Loan.
What are They?
How popular is it?
BlueVine has provided tens of millions in funding to small businesses.
Fundbox (our recommended invoice factor for under $25K in capital)
Who will qualify?
You must be a US-based business, sell products or services to businesses in the US or Canada, and have at least a 530 credit score. No minimum years in business or sales volume requirements.
Who are they right for?
B2B invoicing companies (including startups) that are unable to qualify for a bank loan and need over $25,000 in capital.
Medical and healthcare businesses.
Personal Guarantee required?
Yes. If your client doesn’t pay the invoice when due, your business is liable. If your business can’t pay, you are personally liable.
1 business day for your first invoice; after that, invoices can be approved within an hour or two.
Where do they lend?
All 50 states.
How much do they lend?
$5,000 to $500,000. This works like a line of credit. As your invoices are paid, your available credit increases.
For how long?
Your client should send payment on the invoice directly to BlueVine within 90 days.
Cost/Interest rate of funding invoices?
BlueVine’s effective APR ranges from 28 to 60 %, with an average of 40 %.
How do payments work?
BlueVine advances you 85-90 % of the invoice upfront. Your client pays BlueVine directly when the invoice is due. When your client pays, you’ll receive the remaining amount minus fees.
General information about the business, such as address and Tax ID; Online connection to the business’ bank account or 3 months of bank statements; Information about the business owner applying, including social security number.
BlueVine helps your business keep growing by advancing you working capital now in exchange for outstanding invoices that are due in several weeks or months. You can request a credit line of up to $500K, and even startups can qualify with a credit score of at least 530.
BlueVine advances you 85-90 % of your invoice upfront, and you get the rest (minus fees) when your customer pays BlueVine. Since BlueVine gets paid when your customer pays, you don’t have to make installment payments to BlueVine, essentially giving you access to the capital for a longer time. This distinguishes BlueVine from Fundbox, which is structured like a short-term loan that’s paid back weekly. BlueVine is ideal for businesses that need a lump sum of working capital to cover payroll or other large expenses while they are waiting for customers to pay.
Many businesses dislike traditional invoice factoring because it requires too much client contact, but BlueVine has streamlined the process. BlueVine does not contact your clients, and your clients won’t know you are using BlueVine because all payment details are in your business’ name.
BlueVine’s pricing is very reasonable as far as invoice factors go. According to their website, they charge 1 % per week. After speaking to the company, however, we learned that their fees start at 0.5 % per week, with larger credit lines and repeat customers qualifying for the best rates. The APR for BlueVine averages 40 % but ranges anywhere from 28 %to 60 % depending on the size of your credit line and your history with BlueVine. This is slightly cheaper than Fundbox’s APR and the best APR that we’ve found for invoice factors. It is also lower than what is charged by OnDeck, Kabbage, and other alternative lenders.
There are a couple of things to note with BlueVine. BlueVine is a “recourse” factor, so if your customer doesn’t pay the invoice in a timely manner, you are responsible for settling the debt with BlueVine. In addition, BlueVine doesn’t work with companies in the medical or healthcare industries.
To understand more about invoice factoring or financing, review our comprehensive guide.
- Personal Credit Score: 530 or higher (check your credit score for free here)
- Years in Business: Any
- Revenues: Any
- Industry Exclusions: Medical and healthcare businesses are ineligible.
- Other Qualifications:
- US-based business.
- Customers can be international, but must be English speaking and Invoice must denominated in U.S. dollars.
- Sell products or services to other businesses or government agency (i.e. you are a B2B company).
- The invoice is due in 12 weeks or less.
- The invoice due date is at least 1 week away.
- Each invoice must be worth at least $500.
Collateral Required? No.
Does the loan require a personal guarantee – From who? Yes. If your client fails to pay the invoice, it first becomes your business’ responsibility. You can either make a one-time payment or enroll in the installment plan, during which time fees will continue to accrue. BlueVine also requires an individual guarantee from the business owner, so you are personally liable in case your business can’t pay back the advance. This is a disadvantage compared to competitor Fundbox, which requires no personal guarantee.
Upfront Fees: None.
Servicing Fees: None.
The standard factoring fee shown on BlueVine’s website is 1 % per week with a 3 % minimum. However, the company reached out to us and said that your weekly rate and minimum charge depend on the size of your credit line and your history with BlueVine.
Customers seeking credit lines over $15,000 qualify for better weekly rates, as low as 0.5 % per week. Repeat customers can also qualify for discounted weekly rates.
Customers seeking credit lines over $50,000 can qualify for 1.5 % or 2.5 % minimum charges.
Are interest rates variable? No.
How Invoice Financing is Structured with BlueVine
When you submit an invoice to BlueVine, you receive payment in two parts:
- Initial Advance – Customers get 85-90 % of the invoice amount up front. For example, you get $34,000 upfront for a $40,000 invoice.
- Rebate – This is the balance of the invoice amount that you receive, minus any fees, when your client pays. For example, suppose you factor a $40,000 invoice at an advance rate of 85 % and a weekly fee of 0.8 %. You will receive $34,000 upfront. If your customer pays in 30 days, the fees will equal $1,600. Once your client pays BlueVine, you will receive a rebate of $4,400, bringing total payment on the invoice to $38,400.
Below, we explain BlueVine’s fees in more detail.
How Costs Work With BlueVine
You must take 3 things into account to determine the cost of invoice factoring with BlueVine:
- Advance Rate – As mentioned above, this is the amount of the invoice that you get upfront. 85 % is the standard advance rate. Customers with very creditworthy debtors that request credit lines over $50,000 may qualify for a 90 % advance rate.
- Weekly Factoring Fee – Ranges from 0.5 % to 1 % per week. Higher credit lines have lower fees. The fee rounds up if you’re between weeks. For example, if your client pays in 30 days, you will be charged 5 % interest, as if you borrowed for 5 weeks.
- Minimum Charge – Ranges from 1.5 % to 3 %. HIgher credit lines have a lower minimum charge.
To make it easier to compare BlueVine with other lenders, we’ve taken these 3 items and converted the cost of BlueVine into an Annual Percentage Rate (APR). APR is the cost of a loan over one year.
Here are some examples of what the APR would be on BlueVine:
$10,000 invoice, and your client pays in 30 days – 60 % APR
$25,000 invoice, and your client pays in 60 days – 47 % APR
$50,000 invoice, and your client pays in 90 days – 28 % APR
As you can see, the APR for a BlueVine advance ranges from 28 % to 60 %. Customers who are requesting credit lines over $15,000 and regular customers can expect the lowest APRs. According to the company, their average APR is 40 %. This is a lot higher than what you could expect from a bank loan, but bank loans and BlueVine advances are for a very different set of borrowers. Unlike banks, BlueVine issues money fast, and it can work with new businesses as well as business owners with a low credit score. BlueVine’s APR is better than what is charged by popular short-term lenders like OnDeck and Kabbage. So, we encourage you to learn more about BlueVine if you invoice customers and are experiencing cash flow problems.
BlueVine’s APR range is slightly higher than what competitor Fundbox charges (around 25 to 46 % APR). However, Fundbox only lends up to $100,000, while BlueVine lends up to $500,000.
Due to the 1.5-3 % minimum charge, the APR for BlueVine can increase beyond 60 % if your clients pay BlueVine a week or two after receiving the invoice. However, in that case, you probably shouldn’t be using an invoice factor anyway. Invoice factoring works best when you factor Net 30, Net 60, or Net 90 invoices. For very short-term loans, we suggest Fundbox or small business credit card.
BlueVine has a fast and easy application process. You begin by creating a BlueVine account online, which only about 10 minutes. You will need to provide some information about yourself and your business. Once you create an account, BlueVine typically takes just 1 business day to decide whether your invoices can be funded. If you’re approved, the money will be available in your account in 1-2 business days.
As mentioned above, you will receive two separate payments. The first is an upfront payment of 85 % on the invoice amount. The second is the remaining balance (rebate) minus any fees.
What documents need to be provided? General information about the business, such as address and Tax ID; Online connection to the business’ bank account or 3 months of bank statements; Information about the business owner applying, including social security number.
Do they need online access to any systems – Quickbooks, PayPal, bank accounts? No (it’s optional). You do not have to use accounting or bookkeeping software to use BlueVine. You can create your invoices in your BlueVine dashboard. In contrast, Fundbox requires that you use specific bookkeeping software to create and send invoices.
Is there a credit report pull? If so at what point in the process? Yes. Credit history is pulled when you request your first advance.
Which credit reporting agency does BlueVine use? BlueVine has access to reports from Experian, TransUnion, and Equifax.
Does BlueVine report to the credit bureaus? BlueVine does not report to consumer credit agencies. They will soon start reporting to business credit agencies.
Invoicing Sizes and Terms
What is the minimum / maximum time I can borrow capital? Your customer must pay BlueVine when the invoice is due. You must pay interest for a minimum of 3 weeks.
What is the minimum / maximum amount of available capital? $5,000 to $500,000 credit line. Your credit line is the total amount of invoices that you can have funded through BlueVine at any given time. As your customers pay invoices, you can keep borrowing against your credit line. An individual invoice must be worth at least $500.
Payment Methods & Schedule
Schedule of Payments: Your customer directly pays BlueVine when the invoice is due.
How will I receive my advance and rebate? ACH (free) or wire transfer ($15 fee per wire).
How should my customers pay BlueVine? You should provide your customers with your BlueVine account information. You will be assigned a checking account number and local P.O. Box address, both in your company’s name. Your customers can continue to issue payments in your company’s name and won’t know that you are using BlueVine. They will just think that you changed your payment details. If BlueVine receives payment on an invoice that you didn’t factor, they will pass along the payment to you (expect a 3-4 delay to receive such payments).
What happens if my customer doesn’t pay?: Your business becomes responsible and must pay back BlueVine with a one-time payment or an installment plan. Fees will continue to be incurred if you choose the installment plan. If your business cannot pay back the advance, you are personally responsible for paying it back.
What happens on pre-payment? There is no prepayment penalty if want to repay early. You save money on fees by borrowing for less time. However, you must pay a 1.5-3 % minimum charge, which makes this a very costly form of financing for invoices paid in less than 3 weeks.
BlueVine has email support, phone support, and an FAQ page.
US-based or International? BlueVine is based in the US in Palo Alto, CA.
Support hours: Phone support is available from 9 am – 6 pm PST.
Other Lending Products
BlueVine also offers lines of credit between $5,000 and $50,000. In order to qualify for this product, called “Flex Credit,” you need at a minimum a 600 FICO score and $5,000 per month in business revenues. You also need to have been operating for at least 6 months.
Need some money for your business? Click here to get our FREE Guide:
How to Get a Small Business Loan.
The Bottom Line
BlueVine is a good way to overcome cash flow shortfalls while you’re waiting for customers to pay you for goods and services. We recommend it for B2B invoicing businesses that can’t qualify for a bank loan and want to borrow more than $25,000 in capital.
With BlueVine, you receive an advance of working capital, and your customer pays BlueVine when the invoice is due. You don’t have to make installment payments to BlueVine, which is very helpful for businesses that have unstable cash flow and need access to a large amount of capital until their customers pay. Financing from BlueVine works like a credit line, so as your customers pay your invoices, you can borrow more money.
If you’re looking for an invoice factor for less than $25,000, also check out our review of Fundbox. Their product is more like a traditional loan that you pay back week over week.