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How to Get a Small Business Loan.
What are They?
A short-term lender that advances money based on your outstanding invoices.
How popular is it?
Tens of thousands of businesses (most with fewer than 10 employees) have borrowed capital from Fundbox.
Who will qualify for a loan?
Businesses that invoice customers and have been in business for at least 6 months. Invoices must be due in 90 days or less and be trackable on compatible invoicing software (Freshbooks, QuickBooks, Harvest, Clio, Xero, or Wave).
Who are they right for?
Seasonal or other types of businesses with cash flow problems that need a small line of credit to tide them over until they receive payment on unpaid invoices.
Personal Guarantee required?
Same day approval, and 1-3 business days to get money after an invoice is cleared.
Where do they lend?
All 50 states.
How much do they lend?
$100 to $100,000 credit lines. This works like a line of credit. As your invoices are paid, your available credit increases.
How much can I qualify for?
100 % of the invoice value. How much you can borrow depends on the strength of your application and the financial health of the invoice counterparty. About 40 % of companies that apply are approved.
For how long?
Cost/Interest rate of loan?
The effective Annual Percentage Rate (APR) ranges from 38 % to 54 %.
How do payments work?
Fixed weekly payment is automatically deducted from your business bank account.
No physical paperwork and no tax or financial statements are required. You only need a username/password for Fundbox and the username/password for your accounting software.
Fundbox makes it easy for small businesses to fix cash flow problems by obtaining funding in exchange for unpaid invoices. You can quickly submit invoices for funding online, and Fundbox will advance you 100 % of the value of the invoices.
Although you can only borrow a small amount of money ($100 – $100,000) at a time, Fundbox works like a line of credit to give you continuous access to capital. As you repay what you borrow, you can borrow some more. For example, if you pay back half ($6,000) of a $12,000 invoice, you can then clear a $6,000 invoice. If you have successive small purchasing needs and don’t need a lot of money all at once, Fundbox can be a great way to get ongoing access to cash. For larger credit lines, try BlueVine, which lends up to $500K in capital.
Fundbox works like a traditional loan, requiring you to pay it off with weekly installments. Some businesses that use invoice factoring prefer a lump sum of capital without having to worry about making installment payments. If this is your preference, you may want to try BlueVine. Your customers directly pay BlueVine, so you don’t have to make regular payments. This gives you access to the capital for a longer period of time, but things can get messy if your clients don’t pay the invoice as expected.
The APR for Fundbox advances ranges from 38 % to 54 %. Although this is higher than what a bank would charge, it’s less than what some alternative lenders such as OnDeck and CAN Capital charge. It’s comparable to what BlueVine charges for invoice factoring. BlueVine is actually cheaper for larger dollar amounts, but Fundbox caps out at $100K anyway.
Unfortunately, you can only use Fundbox if you create and send invoices using Freshbooks, Xero, Wave, Harvest, Clio, or Intuit Quickbooks (desktop or online). Check out our comparison of invoicing software to learn more about these products. BlueVine doesn’t require you to use online accounting software.
To learn more about invoicing factoring, take a look at our comprehensive guide.
- Personal Credit Score: N/A.
- Years in Business: At least 6 months.
- Revenues: N/A.
- Industry Exclusions: None.
- Other Qualifications:
- US-based business, and your invoiced customers must also be US-based.
- Invoices must be in $USD.
- Use Freshbooks, Xero, Harvest, Wave, Clio, or Intuit Quickbooks (desktop or online) to create and send invoices.
Collateral Required? No.
Does the loan require a personal guarantee – From who? No.
Upfront Fees: None.
Servicing Fees: None.
- Advance fee – Fundbox charges an advance fee for clearing invoices. A typical advance fee is $47 to $62 on a $1000 invoice. You can qualify for better rates after continued use of Fundbox.
- Transaction fees – A typical transaction fee is $5 to $10 on a $1000 invoice.
Are interest rates variable? Interest rates do not fluctuate with the market. However, if you pay back early you will receive a lower interest rate.
How Invoice Financing Works With Fundbox
There are 3 things that make up your repayment when you obtain a loan from Fundbox:
- Principal. This is the amount of money that Fundbox deposited in your account. 100 % of the invoice(s) that they approve.
- Advance fee charged by Fundbox. Fundbox charges about 4 % to 6 % of the invoice amount as an advance fee. You save money on fees by borrowing for less time. For example, if you pay back the loan in 4 weeks versus the full 12 weeks, your fees will be three times less.
- Third party transaction fees – This is always around $5-10 regardless of the amount of the loan.
We built a calculator to convert the cost of clearing an invoice on Fundbox into an Annual Percentage Rate (APR). This make it easy to compare Fundbox with other loan products. The APR takes all fees and your repayment schedule into account to give you the total cost of the loan over one year, expressed as a percentage. Here is what the effective APR would be for a Fundbox loan:
$1,000 invoice with $10 transaction fee and 6.2 % advance fee = 56 % APR
$1,000 invoice with $5 transaction fee and 4.7 % advance fee = 41 % APR
$10,000 invoice with $10 advance fee and 6.2 % advance fee = 54 % APR
$10,000 invoice with $5 advance fee and 4.7 % advance fee = 38 % APR
The APR for a Fundbox loan is 38 % to 54 %. These examples assume that you are borrowing for the full 12 weeks. If you pay back the loan early, you will save on fees, and your APR will be slightly lower. Fundbox’s APR is comparable to the APR of BlueVine. For larger amounts of capital, BlueVine is a better deal, and Fundbox doesn’t provide more than $100K anyway. The cost of using Fundbox is less than using an alternative lender like OnDeck or Kabbage, so it is a good option for businesses that do a lot of invoicing and need a small line of credit.
Remember that by paying early, you save money on fees. For example, if you pay back a cleared invoice over 4 weeks instead of the typical 12 weeks, your fees will be one third the cost. For a $10,000 invoice, that means $170-240 in fees instead of the typical $520-720. You can use Fundbox’s online calculator to see how much you can save by paying back early.
Fundbox simplifies and streamlines the often complicated invoice factoring process by taking it online. In fact, Fundbox has one the fastest application processes of all the lenders we’ve reviewed. You simply create a Fundbox account and authorize Fundbox to pull unpaid invoices from your bookkeeping software. You can select which invoices you want to clear. Your bookkeeping software remains connected, so whenever you log into your Fundbox account, you can view all your outstanding invoices and choose which ones to submit for funding.
Once selected, Fundbox will tell you right away if the invoice qualifies for clearing. If it does, Fundbox will deposit 100 % of the value of the invoice into your account. It typically takes 1-3 business days for the money to be available in your bank account (for fastest delivery of funds, Fundbox recommends clearing invoices before 1 pm PST Monday-Thursday).
Here’s a video from Fundbox that explains how you can start clearing invoices within just a few minutes:
What documents need to be provided? No physical paperwork is required, and no tax or financial statements are required. Fundbox has a sophisticated built-in algorithm that determines which invoices can be cleared and which cannot be.
Once you create a Fundbox account, you simply type in the username/password for your accounting software. Your invoices will then automatically be imported from your accounting software into Fundbox, and you can choose which invoices to clear.
Do they need online access to any systems – Quickbooks, PayPal, bank accounts? Yes. Fundbox needs access to your business bank account and your invoicing software. As mentioned above, Fundbox can currently pull invoices from Freshbooks, Wave, Harvest, Xero, and Intuit Quickbooks.
Is there a credit report pull? If so at what point in the process? No.
Does Fundbox report to the credit bureaus? No.
If so – What credit reporting service do they use? N/A.
Invoicing Sizes and Terms
What is the minimum / maximum time I can borrow capital? The maximum term is 12 weeks, but you can pay it off earlier than that and save on fees.
What is the minimum / maximum amount of available capital? Fundbox provides between $100 and $1000,000. This works like a line of credit. As you repay Fundbox, you can borrow more capital.
Payment Methods & Schedule
- Schedule of Payments: Weekly .
- Payment Initiation: Fundbox automatically deducts a fixed weekly payment from your checking account (first payment is initiated 8 days after the invoice is cleared).
- Method of Payment: ACH.
- Penalties for Missing Payments: Information unavailable.
- 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. Fundbox’s online calculator shows you how you can save money by repaying early.
Fundbox has email support and an FAQ page.
US-based or International? Both. Fundbox headquarters are in Israel, but it also has a San Francisco office.
Other Lending Products
Fundbox doesn’t have any other lending products.
Need some money for your business? Click here to get our FREE Guide:
How to Get a Small Business Loan.
The Bottom Line
If your business has unpaid invoices and needs to stabilize its cashflow, Fundbox may be a good alternative to a small business loan. Fundbox advances you 100 % of the value of your unpaid invoices, and the process is very fast thanks to Fundbox’s online application and dashboard.
Fundbox acts like a line of credit, which gives you ongoing access to capital. As you pay back what you borrowed, you can clear more invoices. This may work well for a business that can stagger purchases and doesn’t need a lot of money all at once.
Fundbox does not require you to assign your invoices to Fundbox and doesn’t interact directly with your customers. You can rest easy knowing that your customer relationships won’t be harmed.
While invoice financing is costlier (Fundbox APRs range from 38-54%) than a bank loan (bank APRs are around 7%), Fundbox is less than the cost of alternative lenders and other traditional invoice factors. If you’re having trouble qualifying for a loan, you may want to learn more about invoice factors, including Fundbox. Consider BlueVine if you want an invoice factor that lends larger credit lines and doesn’t require installment payments.