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Updated on Wednesday, January 30, 2019
Fundbox is a San Francisco-based online lender that’s been providing short-term financing to small business owners since 2013. They offers two products — invoice factoring and lines of credit — and deposits funds in borrowers’ accounts in as little as a business day. Thanks to investors such as Amazon CEO Jeff Bezos, Khosla Ventures, General Catalyst Partners and Spark Capital, Fundbox has raised more than $100 million in capital. Fundbox also has partnerships with software providers, such as QuickBooks, FreshBooks and Xero.
When approving borrowers, Fundbox performs a “business health assessment” to determine how much a business owner can borrow and in what form. Your eligibility for invoice financing or a line of credit would depend on Fundbox’s assessment of your business transactions.
If you’ve been trying to escape the rigid credit score requirements of traditional business lenders, Fundbox may be a viable lending option for you. We’ll explore the details of Fundbox financing to help you make an informed decision.
Fundbox financing details
Fundbox offers two business financing options that are alternatives to traditional term loans:
- Invoice financing: Fundbox offers up to $100,000 in invoice financing, or factoring, to qualifying business owners. In general, invoice factoring allows you to access money from unpaid invoices. You would sell your unpaid invoices to a factoring company in exchange for funds. The company would then collect payments directly from your customers and give you a percentage of those payments after taking a cut.Unlike other factoring companies, Fundbox allows you to continue interacting with your customers. Fundbox also deposits the full value of your invoice in your bank account right away.
- Line of credit: Fundbox offers revolving lines of credit up to $100,000 for eligible businesses. A revolving line of credit gives you access to capital up to a certain amount. You can draw from that amount at any point and only pay back the money you borrow. As you repay your balance, the full credit amount becomes available again.
The same repayment terms and requirements apply to Fundbox’s invoice factoring and line of credit. When you borrow funds, you must make weekly repayments that include a set fee.
Fees are 4.50% - 6.50% of the amount you borrowed and may vary over time. You could pay off your balance early to save on fees. Fundbox doesn’t charge a registration or subscription. You only pay for what you borrow.
Your payment schedule could span 12 or 24 weeks, depending on the terms you choose when you draw funds. Each Wednesday, Fundbox would use an Automated Clearing House, or ACH, transfer to automatically debit your repayment from your bank account. It would consist of a percentage of your principal and your fee.
If you want to make additional payments or pay off the remaining balance, you can schedule payments from your dashboard.
What businesses are eligible for Fundbox financing?
Fundbox works with businesses in the U.S. bringing in revenue — ideally $50,000 annually. The average Fundbox borrower earns more than $250,000 a year and has been in business for more than a year.
Fundbox would want to review at least two months of activity in an accounting software program or three months of transactions in a business bank account. This requirement would likely rule out any startup businesses from being eligible.
Fundbox does not require a minimum credit score, which may be appealing to business owners with less-than-perfect credit. But the company does monitor your business performance and could adjust your credit limit or fees if anything changes within your company.
Businesses that consistently perform well or have a stable list of clients would be best suited for financing from Fundbox. Even if the business owner has poor personal credit, strong business performance could be enough for approval.
The pros and cons of Fundbox
- No personal credit requirement
- Flexible borrowing
- Fast application process and quick time to funding
- Must provide access to your business accounts
- Fees are subject to change
- Weekly repayments may be difficult to manage
Fundbox application process
To approve you for financing, Fundbox needs to assess the health of your business based on your transaction data. You can choose to give Fundbox access to your business bank account or your accounting software.
Whichever one you choose determines the type of financing you could receive. If you connect your bank account, they will review the transactions in the account to approve you for a line of credit. If you connect your accounting software, they will analyze your activity to approve you for invoice financing.
Your choice should give the best insight into your business and show the company in the best light. For both products, you could receive funds as soon as the next business day if approved.
If you want to share your accounting software, you must be using one of Fundbox’s supported programs:
- QuickBooks Desktop and Online
If you want to connect your business bank account, Fundbox supports more than 12,000 financial institutions across the U.S., including most national, regional and local banks and credit unions.
Fundbox also takes applications from businesses in some U.S. territories, including Guam, American Samoa, North Mariana Islands, Puerto Rico and the U.S. Virgin Islands.
The fine print
Fundbox can deactivate your account. Fundbox doesn’t make you borrow funds as soon as you’re approved — you can wait until a later date. But if you are inactive for an extended period, they may deactivate your account. If that happens, you’ll have to reapply for financing.