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Updated on Thursday, January 14, 2016
If you’re a small business owner, freelancer or solopreneur, you probably experience the stress of sitting on unpaid invoices from time to time. In a perfect world, you would get paid for delivering your products and services right away. But, in reality, you have to patiently wait for the money to roll in. During this time, your business may suffer from low cash flow and your own bills can begin to pile up. Well, BlueVine has a solution. The company offers fast cash advances to cover your invoices.
The BlueVine Cash Advance in Detail
Credit lines are available from $20,000 to $5,000,000. Once approved for a credit line, you can choose which invoices you want to get advances on (up to your credit limit). BlueVine can give you an immediate advance in as little as 24 hours after you sign up and make the first request. Subsequent requests for advances can be funded within an hour.
BlueVine gives you 85%-90% of the invoice upfront. You get the rest of the invoice amount (minus fees) after your customer pays. The standard rate is 1% per week with a minimum of 3 weeks.
Let’s take a look at an example scenario. Say your customer owes you $3,000, the invoice is due in 3 weeks and they pay on time:
- BlueVine will give you $2,550 of the invoice upfront (85% of $3,000)
- The weekly fee is $30 and $90 for 3 weeks (1% of $3,000)
- When your customer pays the invoice you’ll get a remaining $360 balance back
How BlueVine Works
Once you open a free account, you can sync accounting software, like Xero, FreshBooks and QuickBooks, to your BlueVine dashboard and each of your open invoices will populate. If you don’t use an accounting software, you can also enter invoices directly in BlueVine.
From there, you can click on which invoices you want to be paid through a cash advance. BlueVine does set the following guidelines for invoices that can be funded:
- The invoice has to be more than $500
- The due date on the invoice must be at least 1 week away
- The payment term must be shorter than 12 weeks
- The customer has to be a business (and not a consumer)
- The customer must be in the U.S. or Canada
- The product or service must be completed, delivered and accepted by your customer
BlueVine assigns you a P.O. Box and a bank account in your name. Customers either mail payments or deposit money into your account. The money received goes towards repaying your advance and then you’re given the remaining 15% balance minus fees, like we discussed above.
Qualifying for BlueVine Invoice Financing
BlueVine will consider your business cash flow, the strength of your debtors and your credit history to qualify you for funding. BlueVine doesn’t require perfect credit, but your credit score can’t be lower than 530. Additionally, business owners need a 600 credit score and above to qualify for a business line of credit and a 530 credit score and above to qualify for an invoice factoring option.
Both sole proprietors and freelancers are eligible for funding. Your business doesn’t have to be of a certain age to qualify and there’s no sales volume requirement.
Fees and Gotchas
BlueVine has very transparent fees and offers you flexibility with its funding model. Opening an account is free with no strings attached. You don’t have to sign a long-term contract or pay termination fees if you decide to no longer use the service. There’s also no origination fees or prepayment penalties.
You can get funds transferred to you by ACH or bank wire. ACH transfers are free, but bank wires cost $15. BlueVine also offers the opportunity to cut your rate. As you build history using the service, you may qualify for a 20 to 30% discount on the standard rate.
Pros and Cons
There are several benefits to using BlueVine. The application is completely online and you can get access to funds quickly. BlueVine is a viable option if you prefer not to take out a loan to resolve cash flow problems or to grow your business. Unlike other small business loans, a BlueVine advance gives you the freedom to ask for exactly what you need.
What are the drawbacks to the service? Although it’s convenient, it’s not the right solution for chronically late paying clients. You’ll end up paying more and more out-of-pocket the longer they take to pay up. In addition, this service is for B2B operations. If you sell products or services to consumers and not businesses, at this present time you won’t qualify for funding.
Finally, consistently relying on cash advances for your invoices can create a never-ending cycle of debt. Although it’s convenient for one-off situations when you’re in a bind, you shouldn’t depend on cash advances to fund your entire business.
Alternatives to the BlueVine Cash Advance
Fundbox offers another invoice financing solution, but the process is different and the terms are a little more complex. Instead of charging a standard rate like BlueVine, it tacks on a clearing fee which includes the cost of a cash advance and ACH transfer. The repayment schedule is 12 equal weekly payments. Fundbox has no subscription, origination or prepayment penalty fees. To get an idea of how much Fundbox will cost you in comparison to BlueVine check out the site pricing calculator.
For an alternative business loan option, FundingCircle offers loans from $25,000 to $500,000. Terms are available from 3 to 120 months. Interest rates start at 4.99%. The origination fee is 3.49% - 6.99%. There are no prepayment fees and you can get funding in less than 10 days.
Who Will Benefit the Most From BlueVine?
The concept of BlueVine is clever because you can get a cash advance for 85% of the exact amount that’s owed to you. You’ll benefit the most from this service if you trust your customers will pay in a relatively timely manner. Still, proceed with caution. This is not ideal for trouble clients that take forever to pay because you’ll end up sacrificing most of your income to advance fees.