Fundbox Review: A New Kind of Invoice Financing
Fundbox modernizes business financing with automated approval and fresh takes on old funding options.
To access this loan, you’ll have to complete an application with an authorized lender that consists of a two-page form in addition to required documentation. If you qualify, you’ll be loaned 250% of your average monthly payroll in 2019. You may also qualify to have the loan forgiven if no employees are compensated above $100,000 and at least 75% of the money goes to paying workers. If you can’t obtain forgiveness, the loan must be repaid in two years at a 0.5% interest rate after six initial months of interest deferment.
If you think your business would benefit, apply at a Paycheck Protection Program authorized lender.
Not your customers paying their outstanding invoices—at least, not if you have anything in common with the two-thirds of business owners who say their customers don’t pay invoices on time.1
We all know unpaid invoices cause problems, especially with cash flow. And those cash flow problems, in turn, cause working capital problems with payroll, inventory, and business growth. So what’s a small-business owner to do?
Well, you can use Fundbox’s invoice financing or line of credit to smooth over cash flow while you wait for customers to pay up.
In this Fundbox review, we’ll explain what Fundbox is, how it works, and why it might work well (or not) for your cash flow needs. Let’s get started.
Fundbox is best for businesses that need quick cash with few barriers
Fundbox excels at getting you funding quickly. You can get approved for funding in literal minutes and get your money within one to three business days.
But unlike some other online lenders that promise fast financing, Fundbox doesn’t require high credit scores and years of business history. In fact, Fundbox has a lower bar to entry than many lenders. To qualify for funding with Fundbox, you just need to meet three qualifications:
- Possess a business checking account
- Make at least $50,000 in annual revenue
- Have two months of transaction history in your accounting software or three months in your business checking account
That’s it. No need to produce tax returns, business plans, or other financial documents that you usually need to get the best business loans.
That makes Fundbox great for small businesses that need money—and soon—to pay the bills, cover payroll, or meet other short-term financing needs. And if you don’t have a stellar credit history or you haven’t been in business for years? That’s not a problem with Fundbox.
So how do you use it?
How Fundbox works
Fundbox doesn’t use traditional applications. Instead, its proprietary process determines your creditworthiness. You simply allow Fundbox to connect to either your accounting software or your business checking account, and it uses the information within to make a decision.
You’ll start by filling out a form with the most basic of details—your name, phone number, and estimated yearly revenue. Once you submit that information, Fundbox invites you to connect either your accounting software or your business checking account. You can choose either one, but your choice determines what kind of funding you apply for (we’ll explain that in a minute).
Once you give Fundbox the log-in details for whatever method you choose, it will look at your transactions and evaluate you as a borrower. This automated process doesn’t require human underwriters, so you can get an answer within minutes.
As with most financing, applying for Fundbox with the minimum requirements won’t get you the maximum credit limit—you’ll need higher revenue and more time in business to get the best deals.
Note that Fundbox stays connected to your software or bank account until you revoke permission. In fact, Fundbox requires a continual connection to extend you funds. While that might sound scary, Fundbox uses up-to-date security protocols to protect your information, and we haven’t found any consumer complaints of privacy violations or data breaches.
If you get approved, Fundbox gives you a credit limit, and you can start drawing funds. And if you draw before noon Monday through Thursday, you can get your money within just one business day.
Once you have your money, you repay the amount you borrowed, plus fees, over 12 or 24 weeks. Fundbox gives you revolving credit, so you can borrow and repay over and over again.
Fundbox funding options
Here’s where it gets confusing. Fundbox technically offers two different types of business loans: Fundbox Credit, its invoice financing, and Fundbox Direct Draw, its line of credit.
Not only do they have confusing names (Fundbox Credit is not the line of credit), but Fundbox itself discusses the two interchangeably—perhaps because Fundbox started out with invoice financing as its original and only product before later expanding into its line of credit. Plus, the two have similar rates and terms.
But don’t worry, we won’t make you figure out the differences yourself—we’ve done that work for you.
|Name||Type||Weekly fees||Learn more|
|Fundbox Credit||Invoice financing||0.4%–0.7%||Apply Now|
|Fundbox Direct Draw||Line of credit||0.5%–0.7%||Apply Now|
Both invoice financing and a line of credit act as revolving forms of credit. You use only what you need as you need it, so you won’t pay fees on money you never actually used.
You’ll repay whatever you borrow over a term of 12 weeks or 24 weeks, making weekly payments. Terms of 12 weeks will have higher payments but lower fees; 24-week terms will have lower payments with higher fees. Fundbox will automatically withdraw payments from your bank account every Wednesday.
Pretty similar, right? Here’s how they differ.
If you choose to connect your accounting software, you automatically apply for invoice financing (aka Fundbox Credit). Fundbox’s invoice financing gives you a credit limit, and you can draw funds against that limit whenever you have outstanding invoices in your accounting software.
For example, assume Fundbox gives you a $50,000 credit limit. You’ve sent invoices to two clients, which you’ve recorded in your bookkeeping software, but those clients haven’t paid yet. Typical.
Fundbox will use its connection to your software to display those invoices—say, the first invoice for $500 and the second for $2,000. Next to those invoices, you’ll see an option to draw funds for the amount owed. You can draw just one of them, or you can draw both to get $2,500. You can draw against as many invoices as you need, until you reach your credit limit.
You can usually get these funds by the next business day. As an added bonus, Fundbox’s invoice financing can have slightly lower fees than its line of credit.
Line of credit
You apply for a line of credit, on the other hand, by connecting Fundbox to your bank account. The line of credit works similarly to invoice financing—you have a credit limit, and you can draw funds against that limit. The primary difference, of course, is that you don’t need active invoices to draw funds.
The funds on a line of credit may take a little longer to get to you—one to three days—and your line of credit might have slightly higher fees than invoice financing.
Fortunately, unlike most lines of credit, Fundbox won’t require collateral or a personal guarantee. Between that fact and its simple application, Fundbox has made a surprisingly accessible line of credit for young businesses.
|Invoice financing||Line of credit|
|Fees start at 0.4% per week||Fees start at 0.5% per week|
|Fundbox connects to your software||Fundbox connects to your bank|
|Funds draw against invoices||Funds draw against LOC|
|Money typically transmitted next day||Money typically transmitted in 1–3 days|
Rather than charge interest, Fundbox charges what it calls a “drawing fee.” You’ll always know how much this fee costs before you draw money.
Fundbox sometimes talks about this fee as a total of your withdrawn fees, and sometimes as a weekly percentage. For example, you might see Fundbox refer to a 4.66% fee on the money you withdraw (the total), or a 0.4% weekly fee. These refer to the same thing and add up to the same amount. Trust us—we did the math.
Here’s how this works out: Let’s say you withdraw $10,000. On a 12-week plan, which will have lower fees but higher payments, you might have a fee of 4.66%. Multiply that fee by the total (10,000 × 0.0466), and you’ll see you have $466 in fees, for a total repayment of $10,466. Divide that number by 12 (the weeks in your term) to get a weekly repayment of $872.17, which includes $38.83 in fees.
Withdraw amount × draw fee = total fees
Ex., $10,000 × 0.0466 = $466
Again, 24-week terms have higher fees but lower payments. So with that same $10,000, you might have an 8.99% fee. That means you owe $899 in fees and $10,899 total. You’ll make 24 weekly payments of $454.13, $37.46 of which will be fees.
So how do these fees affect APR? Before we answer, let’s brush up on APR.
APR, or annual percentage rate, expresses the total cost of a loan over a year. It includes interest and other fees, like maintenance fees or origination fees. In theory, APR helps you understand how much your loan actually costs you.
Because Fundbox uses drawing fees rather than interest, it doesn’t technically have an APR. Instead, it has what’s known as an effective APR, which serves pretty much the same function as a normal APR.
Here’s the thing about APR: it largely tells you that fees spread over many years cost less each year than the same fees spread over one or two years. If you have a total of $1,000 fees on a loan, but you pay those fees over 5 years, that’s only $200 in fees each year. That same total over 2 years comes out to $500 in fees each year.
Sounds obvious when you put it that way, right? Well, keep that in mind as we talk about APR and Fundbox. You’ll see people complaining about Fundbox’s APR, which falls between 10% and 80%.
And sure, that sounds high—and it is when compared to SBA loans that can have APRs between 6.3% and 10%. But mostly Fundbox’s high APR tells you that you’re paying fees over a short period of time (12 or 24 weeks, in this case). It does not necessarily mean you’re getting a bad deal. You have to decide that part for yourself.
Fortunately, early repayment can minimize your APR.
Good news! Fundbox won’t charge any repayment fees if you decide to pay back your balance early.
Plus, after you repay early, Fundbox waives any remaining fees. That’s right—you won’t get charged those weekly draw fees for the remaining weeks of your term. So if you pay off your balance after just two weeks of your 12-week term, you can save on 10 weeks’ worth of fees.
That, of course, can lower your APR and straight-up save you money. So if you have the ability to repay early, we highly recommend you do so.
Aside from drawing fees, which you’ll know from the beginning, Fundbox doesn’t charge common fees. You won’t pay application fees, origination fees, or early repayment fees on either type of funding—just late fees if you make a payment late.
Fundbox vs. the competition
Fundbox stands out from the crowd of lenders who offer traditional loans, but it’s not the only company to offer invoice-based financing or lines of credit. Here’s how it compares to some of its biggest competitors.
Fundbox invoice financing vs. traditional invoice factoring
Fundbox likes to clarify that it offers invoice financing, not invoice factoring. But what’s the difference between these types of accounts receivable financing?
With invoice factoring, you essentially sell unpaid invoices to a factoring company. They give you a percentage of the invoice—often 75% to 85%—as a cash advance. Because the factoring service now owns the invoice, your customer repays the factoring company instead of you. When the invoice gets paid, your factoring service gives you the remaining amount, minus fees.
With Fundbox’s invoice financing, you get 100% of the invoice amount and simply pay fees on what you borrow, and you maintain control over the invoice. Your customers will still pay you, not Fundbox, which can help you avoid the awkward questions or speculation that clients sometimes have when they suddenly have to pay your lender instead of you.
Fundbox vs. Kabbage
Kabbage offers a line of credit, not invoice financing. But like Fundbox, Kabbage connects with your bank account to make a decision.
Kabbage does offer higher credit limits than Fundbox—a max of $250,000 vs. $100,000—and longer repayment terms of 6 or 12 months. But you’ll have to have been in business at least 12 months to use Kabbage, while Fundbox finances younger businesses.
If you have an older, more established business, Kabbage’s higher credit limits could be worthwhile. But for younger businesses or anyone who prefers invoice financing over a line of credit, Fundbox offers the better option.
Fundbox vs. BlueVine
BlueVine, like Fundbox, wants to provide a better way to get financing from your invoices. BlueVine offers similarly fast funding, and your customers won’t know they’re repaying BlueVine instead of you.
Unlike Fundbox, BlueVine offers higher advance amounts—up to $5 million. However, where Fundbox gives you the entire invoice amount, BlueVine only gives you 85% to 90% of the invoice amount up-front. Plus, BlueVine requires a personal guarantee on your debt, so your assets will be on the line if you can’t repay.
Some business owners will want the higher amounts BlueVine offers. Overall, however, we think Fundbox offers a better deal.
Fundbox user reviews
All this information is well and good, but do people actually like Fundbox after using it? Well, yes. Fundbox has an A+ BBB rating and a 9.7 out of 10 on TrustPilot.
Reviews praise Fundbox’s reasonable cost, easy applications, and fast fund transmission. Interestingly, the few negative reviews complain about some of the same things positive reviewers praise. But they also say Fundbox’s fees cost too much and funds were slow to arrive.
Some reviewers also complain that Fundbox gave them a credit limit that was too low, and a few reviewers said they wish they could repay monthly instead of weekly. If weekly repayments pose a problem for you, Fundbox might not be your cup of tea.
We’ve covered a lot, but not everything. Let’s answer some lingering questions about Fundbox.
How do I decide between Fundbox’s invoice financing and its line of credit?
Fundbox’s invoice financing and line of credit function similarly, and both work well for businesses who need help with cash flow while waiting on unpaid invoices. Your application method decides which you get—whether you connect your accounting software or bank account.
Fundbox suggests you connect whichever method better reflects your business’s finances. So if you put invoices in bookkeeping software, get invoice financing. If you don’t, but your bank account shows your transactions, get the line of credit.
Which banks does Fundbox support?
Fundbox claims to connect with over 10,000 banks. We don’t have the full list, but we think you can safely assume Fundbox supports your bank. You’ll find out for sure about two minutes into the application process.
What accounting software does Fundbox support?
Fundbox supports some of the most popular accounting software:
- PayPal Invoices
Will Fundbox ever raise my credit limit?
Yes, Fundbox can raise your credit limit over time—but it’s not a guarantee. Fundbox reviews active accounts from time to time to make sure they have appropriate credit limits. Your chances of getting a limit raise increase if you make payments on time and have lots of transactions in your software or account.
If you have Fundbox Credit, Fundbox also advises updating your bookkeeping regularly to increase your chances at a higher limit. If you use Fundbox Direct Draw, it suggests uploading supplemental documents such as tax returns to further prove your creditworthiness.
Will applying for Fundbox affect my credit score?
Fundbox could have a small effect on your credit score if you get approved for funding. It may conduct a soft inquiry into your credit when you first apply, which won’t affect your score. If you get approved and make a draw, Fundbox might make a hard inquiry, which could affect your score.
Fundbox doesn’t report to any of the credit bureaus, so on-time payments will make you and Fundbox happy, but they won’t provide a credit boost.
Fundbox offers an exciting new way to access old kinds of funding—invoice financing and lines of credit. Its automated application process means you can get approved and funded quickly, even if you haven’t been in business for several years or if you don’t have a perfect credit history. We recommend Fundbox for small businesses who need help with cash flow, especially due to unpaid invoices.
However, Fundbox does come with high APRs and relatively low credit limits, so some more established businesses may want to look elsewhere.
At Business.org, our research is meant to offer general product and service recommendations. We don’t guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.
- SmallBizDaily, “Small Business Owners Struggle with Cash Flow Problems, Survey Shows”