Fundbox Ltd was founded in 2012 and started offering its product in 2014 with the niche business model of providing advances on outstanding invoices to businesses and freelancers. One of the company’s founders, Eyal Shinar, came up with the idea for Fundbox after he watched his mother struggle with cash flow in her staffing business in Israel. Fundbox’s goal is to help small businesses maintain adequate cash flow by reducing their wait time for customers to pay invoices. Fundbox aims to address a more narrow and immediate need: paying business owners for the work they’ve already done.
- Easy loan requirements
- Get funds quickly
- Transparent fee structure
Businesses and Freelancers
Businesses and freelancers can sign up for Fundbox and link their bookkeeping applications to find out if Fundbox will advance funds for their outstanding invoices. The company uses algorithms to determine which invoices it will provide funding for and what cost its customers will pay for the advances. The advance and all fees must be paid off within 12 weeks.
Easy-to-Meet Loan Requirements
Fundbox’s requirements don’t focus solely on a company’s years in business, credit rating, or revenue. Businesses that sign up for the service link their accounting / bookkeeping applications and their checking accounts to Fundbox. Fundbox then uses a series of complex algorithms to ensure the businesses are legitimate, and determine the risk of advancing funds. Fundbox makes advances to some customers who have been in operation as little as nine months, so it is a good resource for new businesses. The process for advances is also weighted toward outstanding invoices, not annual revenue, so new businesses may be eligible as long as they have completed work and are owed money by their customers.
All businesses registered in the U.S. may sign up for Fundbox. The company also allows freelancers to apply for advances.
Automated Process Gets You Funds Fast
Businesses sign up for a Fundbox account and connect their bookkeeping applications to Fundbox so the company can see the available unpaid invoices. Fundbox supports the following bookkeeping apps and states it is adding more supported apps all the time:
- QuickBooks Desktop
- QuickBooks Online
Companies do not have to fill out an application for funding or speak with a loan officer. They merely select which eligible invoices they would like an advance on, and submit them to receive the funds. Fundbox states businesses can receive the advances in as little as one business day depending on how fast their bank processes funds transfers.
Transparent Fee Structure
Before they apply for an advance on an invoice, businesses can see what they will be charged for transaction and advance fees if they take the full 12 weeks to pay off the advance. Businesses that pay off the advance in less than 12 weeks are not charged a penalty for early payoff and any remaining fees are waived. Fundbox does not charge any origination fees or closing fees for its advances. The company also does not assume ownership of the outstanding invoices, but offers it advances as unsecured loans.
Major Venture Capital Support
Fundbox is getting serious support from major venture capitalists. The company recently announced it has raised $50 million in new financing from investors including Bezos Expeditions (investment company of Amazon.com’s CEO Jeff Bezos), Spark Capital Growth, actor Ashton Kutcher, Guy Oseary’s Sound Ventures, Entrée Capital, Khosla Ventures, General Catalyst Partners, Shlomo Kramer, and Blumberg Capital. The company had previously raised $40 million in March 2015.
- Limited types of funding
- Limited Track Record
- Risk Ranking
Limited Types of Funding
Businesses are limited to the kinds of funds they can receive from Fundbox. The company only offers advances on outstanding invoices. You cannot use Fundbox to secure more traditional business loans to cover expansion or purchase equipment. Fundbox also locks you in to a maximum 12-week repayment plan.
Paying for Your Money
Fundbox offers a legitimate service for businesses struggling with cash flow problems, but that service is going to cost you. For a $15,000 advance on an invoice, Fundbox’s fees ranges from $720 to $1,020. However, there are no hidden fees, closing fees or origination fees. Nerdwallet.com states a $10,000 advance will cost 43.95 percent to 63.73 percent APR over a 12-week period. You can repay early at any time without penalty. Fundbox will waive any remaining fees, so you’re only charged for the time you used the funds.
Limited Track Record
The company has only been offering cash advances since 2014 so it does not have a lengthy track record of business funding and may lack the expertise to identify the businesses that would be the best choices for this type of funding advance.
Fundbox states it uses algorithms coupled with a business’s outstanding invoices to determine how much it can get in advances and what fees will be applied. There is no information on how much of a factor a company’s credit score, revenues, or years of experience factor into Fundbox’s risk rating. For businesses with an excellent financial history and strong revenues, but with few outstanding invoices, Fundbox would not be a useful solution for needed cash.
Businesses must use App
Because all of Fundbox’s funding decisions are made online, businesses must use a bookkeeping application that can link to Fundbox. This limits the number of businesses that can receive advances from Fundbox; for example, small businesses and freelancers that use Microsoft Excel to track their invoices are not eligible to get advances on outstanding invoices. Fundbox will notify businesses that they have insufficient accounting history if they do not have sufficient invoice history using one of Fundbox’s supported apps.
Limited to the United States
Currently, Fundbox only offers advances to businesses registered in the U.S. The company also will not advance funds for outstanding invoices that are in a foreign currency or are being billed to international clients.