Established in 2013 and based in San Francisco, California, Fundbox is one among many of the US-based non-traditional lenders who provide funding to small businesses. Fundbox can be a very good fit for a company which is fairly new (to get funded, your company must be at least 3 months old) and for which the company's credit history isn't yet that appealing.
What sets Fundbox apart from other lenders is the ease of their application process and the speed with which they can give you your cash. Fundbox offers only two different services; specifically, a revolving line of credit which they call their Direct Draw product, and Fundbox Pay, which is similar to invoice factoring (though with some important distinctions). What is important to note here is that the maximum loan amount that can be approved is $100,000; for some businesses, that will be wholly inadequate. Moreover, the repayment terms are exceptionally short, at only three to six months, and repayments are made on a weekly basis (which might not be workable for some borrowers).
The Fundbox application process is extremely convenient and quick because Fundbox requires you to link it to either your online banking partner or to the invoice processor that you use. Because they partner with nearly a dozen invoicing software companies (e.g. QuickBooks, PayPal, Zoho, Xero, among many others) plus about 12,000 US-based banks, you will almost certainly be able to get a decision within a short time frame. Why the need, you might wonder? Fundbox says in order to give you the best offer, it is looking for a more complete picture of your company's overall health, and what better way than a glimpse into your bank account or invoicing data?
Does it make a difference which “glimpse” you provide Fundbox, either your bank account or your invoicing data? Fundbox says it does. If you apply through your bank account and get approved for the line of credit, you will be borrowing against it. On the other hand, if you apply using your invoicing software and get approved for invoice factoring, you will get an advance against your own invoices.
Fundbox offers only two funding products:
|Direct Draw; revolving line of credit||$100||$100,000||APR beginning at 4.66%||Weekly fee ranges from 0.5% to 0.7%||12 weeks; repayment weekly|
|Fundbox Credit: Invoice factoring||$100||$100,000||APR beginning at 4.66% for 12 week term and 8.99% for 24 week term||Weekly fee ranges from 0.5% to 0.7%||12 to 24 weeks; repayment weekly|
What Fundbox offers its small business clients is pretty straightforward. They have either a revolving line of credit option which they call Fundbox Direct Draw and invoice factoring which they call Fundbox Credit.
With Fundbox Direct Draw, a borrower can draw against the line of credit up to the maximum amount of the line approved (maximum amount for the best borrowers is $100,000). One week after a draw, repayment of that draw will commence weekly each Wednesday until it is repaid. A significant advantage of a Fundbox line of credit is amounts repaid will become immediately available to re-borrow.
With Fundbox Credit, a borrower can draw against outstanding invoices, up to 100% of the face value of the invoice. This is very different from traditional invoice factoring in which the lender will hold back or reserve a certain percentage until the invoice is paid by your customer. Fundbox says that it can work with B2B invoices (business-to-business) as well as B2C invoices (business-to-consumer).
The difference between Fundbox and other lenders of this ilk is that Fundbox Credit requires weekly repayment of the draw, regardless whether or not you have been paid by your customer. The onus of repayment is wholly on you, which is why Fundbox is willing to advance 100% of the invoice's face value. One other positive aspect of Fundbox Credit is that you can choose the repayment term of either 12 weeks or 24 weeks. Moreover, you can repay the amount due without incurring any early penalty.
Both the Direct Draw and Fundbox Credit product have a fixed repayment schedule which is conveyed to you before each weekly repayment. Those repayments are made by direct withdrawal from your business checking account through the ACH. A calculator on the Fundbox website can give you an idea exactly what your weekly payments will be for either the 12 week or 24 week product.
A review of their website will show that Fundbox is among the most transparent of its peers when it comes to rates and fees. The interest rate assigned will be based on their overall judgment of your company's creditworthiness, that rate will be conveyed to the borrower in the offering. Fundbox also notes that they do periodically review their customer's profile in order to provide an increase in the maximum funding amount available. Aside from the interest rate charged (which is listed at a weekly rate since repayment is weekly), there are no “hidden fees.” They do not have an origination fee, nor a draw fee, nor a maintenance or subscription fee. More importantly, there is no fee if you decide to prepay your loan sooner.
On the issue of a late payment, the fee assessed is a little less clear. Fundbox requests that you keep them in the loop if you think you will be late or if you will need to skip a payment. Because repayments are done weekly, they generally will push the missed payment to the back of the term. They will charge a late fee as well as a penalty of $1 for each draw. An NSF fee (non-sufficient funds) of $6 may also be assessed if the ACH payment is returned. The bottom line is Fundbox wants to work with you if the repayment schedule can no longer be satisfied.
Fundbox has said on its website that though they do not have a minimum FICO score requirement for their borrowers. Still, their typical customer has been operating for more than one year with annual revenues over $250,000.
The process starts with the most basic information and the establishing of an account from the Fundbox homepage. Thereafter, Fundbox will require that its applicants complete the application for a loan through any of their compatible invoicing software companies or through any of the 12,000 banks it has partnered with. If the application is filed through the invoicing software, they will consider you for the Fundbox Credit; if the application is filed through the bank account they will consider you for the Direct Draw. In either case, Fundbox is able to better gauge the borrower's creditworthiness and strength. In fact, in some cases, they say they can provide the borrower with a loan decision within a few minutes.
In the initial stage of evaluating a borrower's credit strength, Fundbox may do a soft pull of your credit which won't impact your overall FICO score. However, if the loan is approved or if you request a draw against your loan, they may do a hard pull which may negatively impact your FICO score.
For the most part, Fundbox can make a credit decision very quickly, often within hours, but sometimes sooner. Funding of your draw is also generally within a single business day, though some online customer reviews have said that funding of a Direct Draw took a bit longer.
Fundation prides itself on having an exceptional team to meet the needs of its clients. All of its customer service representatives are available either by email or by phone, though each borrower will have been assigned a dedicated account representative. From the early stages of the application process, representatives will answer questions and help the borrower better understand exactly what they have agreed to in terms of interest rate, fees and repayments.
In general, there are very few user reviews for Fundation. On the website Trustpilot, there are only two reviews, both of which are 5-star or excellent ratings. The fact that there are very few reviews may worry some business owners, but we found no reason to be alarmed during this Fundation review. The offering seems solid, and it could very well be that Fundation focuses more of its efforts on helping its clients than soliciting reviews. Having said that, one review on Trustpilot noted that the process was positive overall, but that interest rates were high; that is to be expected with this type of lender, especially if the borrower does not have a sterling credit rating. Perhaps more importantly, Fundation is accredited by the Better Business Bureau and does not presently have any complaints against it – a metric we value more than its lack of ratings on user-review sites. Finally, Fundation has received some positive reviews and reports in the mainstream media, including from Bloomberg, The Wall Street Journal, and the American Banker.
Fundbox could be a good fit for a borrower which doesn't need a whole lot of funding since the maximum loan amount is only $100,000. For customers who need more than this, there are plenty of alternatives in the field. If the borrower has only fair to middling credit history, then Fundbox could be a good fit, as they don't have a minimum FICO score, and minimum revenues are relatively achievable. While the interest rate/fee can be high for the products offered, there are no other fees which can whittle away at the loan proceeds.
One downside for some borrowers is that they are required to link their bank account or invoicing software account to Fundbox so that they can make an initial credit decision, and then to periodically evaluate the Borrower's credit strength. That requirement may essentially shut out small business owners who still do business the “old fashioned way.”
The bottom line is that the process of applying for a loan with Fundbox is quick, as is the turnaround time for funding. Moreover, the borrower only pays for what he gets; interest is charged only when a draw is made. One thing that should be taken into consideration is that the repayment can be pretty fast and furious. The borrower has less than six months to repay the loan which could be problematic for some customers with seasonality or slow-pay issues. On the flip side, if the weekly payments aren't an issue, the short loan duration means the light at the end of the tunnel is pretty quick in coming, and the fact that the loans can be prepaid early without penalty is icing on the cake