Forget traditional lending — invoice financing can help with quick cash needs.
The road to a successful business is long, and you’ll likely need extra cash at some point to bridge a financial gap. Before online lenders came along, your only option was to drag a load of paperwork to your local bank to apply for a loan, often waiting weeks for a decision.
Now, even if you’re the new kid on Main Street, you can find a range of online providers working hard to earn your business with fast decisions that look beyond your credit score when deciding how much they can provide.
Here, we take a look at how two nontraditional short-term business lenders, BlueVine and Fundbox, compare.
Overview of BlueVine and Fundbox
It wasn’t long ago that BlueVine and Fundbox themselves were the new kids. In fact, both lenders were founded in 2013 with small business in mind. Each offers small businesses access to lines of credit and cash advances on unpaid invoices — called invoice financing.
BlueVine can approve you for a business line of credit for ongoing funding without tapping into your cash flow. It also offers invoice factoring, whereby you sell your invoices to BlueVine for a percentage of what you’re owed. After your customers pay their invoices, you’ll get a rebate for the remaining percentage, less BlueVine’s fee based on the term and value of the invoice.
Fundbox differs from BlueVine in that it rolls together a line of credit and invoice factoring into its business financing offer. When it comes to determining your rates and terms, it emphasizes the financial health of your business over your credit score. As with BlueVine, approval and funding is easy and quick.
First, am I eligible?
You’re eligible for a business line of credit if:
- You’ve been in business for at least six months.
- Your personal credit score is at least 600.
- Your business brings in at least $5,000 a month.
- BlueVine does not offer lines of credit for businesses in Kentucky, Nevada, New Hampshire, North Dakota, South Dakota, Tennessee or Vermont.
You’re eligible for a business invoice factoring if:
- You’ve been in business for at least three months.
- Your personal credit score is at least 530.
- You have QuickBooks Online, QuickBooks desktop 2009 or later, Xero and Freshbooks, or you can do your invoicing manually.
- BlueVine’s invoice factoring is not available to businesses that are in the health care or medical industry.
You can apply for a business loan with Fundbox if:
- Your business is registered in the United States.
- Your invoice history has been active for the past three months.
- You either use accounting software partnered with Fundbox or have a valid business checking account.
Which lender can get me money faster?
Your application takes no more than a few minutes to complete, requiring your contact information, the amount you’re interested in and a link to your business accounts. You’ll get a funding decision typically within a day, with funding on the same day if you pay for a wire transfer. Otherwise, it can take two to three business days to see your money.
To apply with Fundbox, create an online account with your personal and financial details. You’ll then connect your bookkeeping software or business bank account and submit your information. You should hear a decision within a few hours. Once approved, your funds are transferred to your account as early as the next business day.
You can get your funding more quickly with BlueVine if you pay a fee for a wire transfer. Whereas Fundbox offers a quick option without fees or fuss.
Which has a better reputation?
Based on 500 Trustpilot reviews, BlueVine scores a decent 9.3 out of 10, with more than 80% of its customers rating it an excellent service. But many users complain about high interest rates that can result in more expensive payments than competitors.
Fundbox has almost as many reviews on Trustpilot and averages 9.7 out of 10. Add to that more than 90% of its customers who rated it an excellent lender. Customers also sound pleased with Fundbox’s customer service.
The numbers say Fundbox has a higher rating, and more people say its services are excellent.
How much can I borrow with each lender?
You can borrow from $5,000 to $100,000 through a BlueVine line of credit and $20,000 to an incredible $2.5 million through invoice factoring based on the amount of your invoices advanced.
With Fundbox, you could be approved for anywhere from $100 and $100,000 as a line of credit.
It comes down to how much you need. If you’re in the market for a business line of credit, Fundbox might offer you more options. But if you have a lot of high-amount invoices you’re looking to offload, BlueVine might be the better way to go.
Which lender offers more affordable financing?
Both lenders charge fees that they’re not so keen on disclosing without you submitting specific information about your business. Borrowers who are serious about picking between these two lenders may want to get a quote from each to compare pricing.
Interest rates for BlueVine’s 6- and 12-month lines of credit start at 4.8%. But for invoice factoring, you can get from 85% to 90% of the invoice amounts you’re owed. As long as your customers pay their invoices as expected, you won’t make repayments. (Then, if your customers paid as expected, you might not need BlueVine at all.)
BlueVine doesn’t charge you prepayment penalties, origination or monthly service fees. But if you need funds more quickly than its standard delivery, you’ll pay a $15 wire transfer fee for the convenience.
With lines of credit, you get a two-week grace period on late payments before you pay a late fee — a fee whose amount is at the discretion of BlueVine.
Fundbox technically doesn’t charge interest on its loans. Instead, it charges a percentage of your balance as a fee each time you make a payment — a payment that’s weekly, not monthly, and sure sounds a lot like interest. Rates start at 4.66% for a 12-week credit line and 8.99% for a 24-week credit line.
If you’re unable to make your payments on time, you could be stuck with triple the amount you owe, also reimbursing Fundbox any fee that comes with its failed attempt to withdraw money from your accounts.
With its advances on your unpaid invoices, Fundbox deposits the entire amount that you’re owed into your account right away, and you then have 12 weeks to pay it off — plus a fee. Fundbox also allows you to stay in touch with your customers, even when you aren’t collecting payments from them.
Fundbox doesn’t charge interest on its credit lines, but BlueVine doesn’t come with as many fees as Fundbox. If you compare the percentage both lenders tack onto your repayments, you could potentially end up paying less with Fundbox — but that’s only if you decide to go with its 12-week loan.
Stacy sips on a coffee shop renovationStacy’s been running her family’s coffee shop for a year and now wants to celebrate the anniversary with a weekend renovation. She has about $25,000 in a few outstanding invoices and thinks $20,000 is enough to cover her plans. And she’s fairly certain that her customers are on the cusp of paying off their bills.
Wanting to get started as soon as possible, she narrows down her options to the nontraditional lenders, BlueVine and Fundbox.
|Fees||10–15% of the invoice amount; optional wire transfer fee of $15 to receive funds faster||Weekly fees starting at 8.99% for a $20,000 loan with a 24-week term|
|Ease of application||Online application takes minutes to complete, and you’ll hear from them in 24 hours.||Online application takes minutes to complete, and you’ll hear from them in a few hours.|
BlueVine is willing to advance a $20,000 line of credit based on Stacy’s outstanding business invoices, but she realizes that she would end up paying $960 or more in interest over the 12-week repayment term, depending on the rate she qualifies for.
With Fundbox, Stacy could end up paying even more in fees, but she’s confident that she’ll pay off the loan early. In the end, Stacy goes with BlueVine because it offers a longer loan term, just in case, and no prepayment penalties should her confidence pay off.
Get Fundbox business financing
When it comes to BlueVine and Fundbox, deciding which is best depends on how much you need, how quickly you need and how long you’re looking to pay it off. If you’re worried about your personal credit history getting in the way of a business loan and have only small invoices for an advance, Fundbox could be a better choice. If you have stronger business credit and bigger invoices, BlueVine could be worth a look.
But you don’t have to limit yourself to these two options — it’s always a good idea to compare some of the best business loan providers before deciding on a lender.
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