New and smaller businesses must keep cash flow consistent to ensure operations run smoothly. Interruptions to payments and expenses can derail your growth, and business lines of credit can help when issues arise.
However, getting a line of credit or small business loan from traditional banks often requires a sterling credit report or high revenue streams. What can newer and small businesses do when they don’t meet these requirements?
This is where non-bank lenders like Fundbox could be a viable solution. Their main product is the business line of credit, and they also offer some unique features to help with managing your business finances day-to-day. Fundbox term loans are in beta and available to select applicants.
They also have an excellent online reputation. This is particularly true for their customer service. Fundbox’s line of credit or a Fundbox term loan can help businesses in need of immediate funding.
The application process is easy and streamlined. Once funding is approved, you can usually add funds to your business checking account within 1-2 days, and sometimes you can get funding by the next business day.
It is ideal for businesses with low credit scores or those building their credit profiles. With high rates and a maximum loan/credit limit of $150,000, there are limits to what you can do. However, the quick and easy application, and fast funding, can be a lifesaver for businesses.
In this Fundbox review, we’ll cover the pros and cons, how to apply, and help you determine if Fundbox is right for your business by answering the following questions:
Fundbox is an online lending platform for small and new businesses. They have two products: a business line of credit and term loans. Their main product is the revolving line of credit. Fundbox term loans are still rolling out, which it states is in “beta.” When determining eligible borrowers, they look at your personal credit, business bank account, and accounting software. They are a good option for small business owners that need a loan quickly.
Fundbox also has a low minimum credit score requirement, which is good for small businesses and owners in the low to fair credit ranges. They offer a solid alternative option to traditional business loans and other lenders that are more stringent in their underwriting guidelines. The company includes unique features for its line of credit, which we will cover below.
Credit lines let you draw funds directly to your business checking account. In some instances, you can get your funds the next business day. They will also debit your account according to the payment schedule. You need to make weekly payments once you draw funds.
You can apply for a Fundbox line of credit for up to $150,000. Your business’s overall financial profile determines if your business qualifies for lines of credit. Companies can use funds to solve cash flow issues and make scheduled payments. Repayment terms are 12 or 24 weeks. Interest rates begin at 4.66% for 12-week terms and 8.99% for 24-week terms. However, interest rates can go much higher.
There is no early prepayment penalty, no origination fees, and no maintenance fees. Paying off your loan replenishes your available credit. You can draw additional funds before paying off the previous draw. Over time, making payments could increase your credit limit and reduce your borrowing rates and applicable fees. Keep in mind there are late payment fees and non-sufficient funds fees if your business account doesn’t have adequate funds to make your line payment.
Fundbox term loans are currently only available to select customers. A term loan is a more traditional type of business loan. The borrower gets a large lump sum of money upfront. Funds are typically used for one-time expenses, such as:
The maximum loan amount is $150,000, while the average loan is $20,000. The borrowing fee starts at 8.33%, and there is no origination fee.
The principle and interest are made in equal weekly payments according to the schedule. The Fundbox business loan currently offers loan terms of 24 or 52 weeks. The first payment deducts from your account 5 days after the loan is funded, and payments are automatically debited from your account after that. There are no penalties for paying off the loan early.
The Flex Account allows you to draw from your line of credit to cover business costs. Examples of costs you can pay include:
Flex spending is a unique feature of Fundbox lines of credit. You can repay Fundbox within three days to avoid fees or interest payments. After three days, the transfer counts as a standard line of credit draw. The three-day grace period gives businesses more flexibility in making short-term payments to cover expenses.
This service uses your connected bank accounts to predict your company’s cash flow. It sends alerts if there is any risk of falling below a certain threshold.
Fundbox also offers a premium subscription service for $99 a month. The service gives users 20% lower fees, increases the time to repay loans, and provides exclusive benefits.
One of Fundbox’s competitive advantages is the simplicity of applying. It is a good option for less established businesses that may not have a great credit score. The requirements are:
The Fundbox application requires connecting your business checking account. The automatic system reviews your account to determine your business strength. Fortunately, you do not need to provide a business plan, and other documentation is minimal.
When you first apply, Fundbox will do a soft credit pull, which will not impact your credit score. Once you move to fund the loan, they will perform a hard credit inquiry, which could have a small impact on your credit score.
Getting a Fundbox loan might require a personal guarantee, especially for higher loan amounts. This signed agreement states that if the business cannot repay the loan, the borrower becomes personally liable for the remaining balance.
Another possible condition of a Fundbox line of credit or loan is a lien on your business. This doesn’t state specific assets; it is a general lien where Fundbox can pursue assets to recoup its losses in case of a default.
You can draw funds from your Fundbox line of credit at any time. Funds could be available by the next business day if the pull request is early enough in the day. There are no draw fees to draw funds, and you can select your payment terms.
Fundbox interest rates can be very high. Your credit and business strength determine the interest rate you get. You could improve your interest rate and get better rates on future plans as you make payments.
Fundbox links to your business checking account or accounting software for the life of the loan. During the application process, you will give Fundbox access to your business checking account. They use this information to determine your eligibility, loan amount, and rate.
Fundbox’s link to your account lets them transfer funds rapidly. More importantly, they will automatically debit your account according to the payment schedule. This serves as a convenience for the merchant and financial protection for Fundbox.
You will need consistent revenue to ensure funds are available for the payments. Fundbox and its partners can see your account activity.
Applying for a Fundbox loan is fast, easy, and convenient.
You will need to provide basic information about yourself and your business. This includes identifying the business owners, whether you are the principal owner or not, and what percentage of the company you own.
You can apply for a Fundbox line of credit or term loan through United Capital Source to ensure that your application is done correctly and that you get access to our wholesale rates & terms.
You will need to determine what type of loan you need between a term loan or lines of credit. You also select your preferred repayment schedule. As a reminder, lines of credit can be in 12 or 24 week terms. Business loans have an option for 24 or 52 week payment schedules.
Fundbox requires access to your business checking account. During the application process, you will also indicate your preferred payment terms.
Fundbox uses an AI-powered application process. This is why filling out the application and getting approved happen so quickly.
You can complete the application process in about 5 minutes and get a decision within a few minutes after that. The speed of the application and approval is one of Fundbox’s unique advantages.
Once you have your offer, you can accept the funds. For a line of credit, funds will transfer in 1-2 business days, depending on the time of day when you request it. For term loans, funds will deposit within a few business days.
Your Fundbox account could be funded the next day after applying for business lines of credit. Your first payment will automatically debit from your account five days after your term loan deposits or your first credit line draw.
After that, automatic repayments will occur weekly for the set duration of the Fundbox financing. Payments deduct from your account automatically, so you don’t need to do anything additional.
However, you can make early repayments to save on interest. Since there are no early prepayment penalties, this could be an effective strategy to offset Fundbox’s high interest rates. While they don’t have any origination fees, keep in mind there are late payment fees.
Pros:
Fundbox business loans are a convenient solution to an immediate cash flow shortage or business need. Fundbox offers the fastest loan approval process on the market. The streamlined application process and quick funding mean you can get your hands on the money within days.
Another advantage of Fundbox is low fees and flexible payments. Fundbox doesn’t charge origination, application, maintenance, or prepayment fees. Flex spending on everyday expenses lets you pay off Fundbox credit draws within 3 days to avoid interest charges. In addition, you can make early repayments to reduce your total interest payments.
Fundbox has excellent customer support. Although they operate primarily online, they also offer telephone support Monday through Friday from 8 AM – 8 PM EST. You can contact them through email or their online dashboard. You can also reach them through social media such as Twitter and direct messaging (DM).
It also provides a robust help center to answer common service questions. The information is categorized by topics, such as choosing between a term loan or a credit line. This area also includes helpful information about connecting your bank and accounting software to Fundbox. You can use the search bar on the screen to find specific topics.
Additionally, the company’s resource center includes blog posts, FAQs, and guides on all aspects of accounting and taxes.
Cons:
The most common criticism of Fundbox is low credit amounts. The maximum funding for their business line of credit is $150,000. Fundbox periodically reviews customer accounts and increases credit limits.
However, some customers complain that the credit increases don’t come fast enough. They also don’t know when Fundbox will review their accounts again. Borrowers needing more significant cash flow might want to look to other lenders.
Fundbox’s rates can be very high, with APRs as high as 80%. This can be slightly offset with early repayment. Similar to credit limit increases, Fundbox could also improve your rate as you make scheduled repayments.
Some of the high rates are due to accepting lower credit scores. Before settling on Fundbox, you might want to see if you qualify for another line of credit that’s less expensive.
Fundbox doesn’t report to credit bureaus, so paying off your loan on time won’t make any difference to your credit report. That means that Fundbox isn’t an option to improve your personal or business credit. If you want a business loan that could increase your credit score for future loans, consider a different business funding option.
It is an understandable question. You might be suspicious that it is easy to qualify for Fundbox versus other online lenders. You can rest assured that Fundbox is a legitimate online lender. Fundbox has an A+ rating with the Better Business Bureau and an excellent rating with Trustpilot.
It also has very many outstanding online user reviews. That being said, any loan comes with intrinsic risks if you default. An important thing to remember is that Fundbox can hold you personally liable if you sign a guarantee.
Fundbox requires a minimum credit score of 600. In addition, your business needs to be at least 6 months old and do a minimum of $100,000 in annual revenue.
Access to your business checking account is a core component of how Fundbox works. They will look at the previous 3 months of activity in your account to determine your revenue streams and available operating capital. Your credit line and rates are based on this information.
Once the business loan is funded, they will deposit the funds directly in your bank account. Your repayments will also automatically debit from your bank account. In addition, Fundbox and its partners will have ongoing access to your account activity.
No, Fundbox does not impact your credit score. Fundbox does an initial soft credit pull during your application. They will do a hard credit pull when funding the loan, which does show up on your credit report and could impact your credit score.
However, they do not report to any credit bureaus, so paying off your loan won’t improve your credit. If improving your credit score for future business loans is a priority, another lender might be a better option.
Positive:
Fundbox reviews primarily focus on the ease and convenience of getting a business line of credit or term loan. Their AI-powered application process makes applying super simple. You also get an answer right away and can receive funding within days.
They are also known for their customer service and support. Fundbox offers robust tools to learn about its different products and business needs. They also provide dedicated customer service centers to answer your questions.
Negative:
Many of the more recent negative reviews are mainly about customer service letting them down and having to speak to many people, and getting the run around for problems that are above and beyond what the average support person can help with.
People also complain about the tech not working all the time. For example, they had to reconnect a QuickBooks account multiple times and keep it connected. This person claimed the IT support was non-existent and was on hold for hours at a time.
Fundbox is known for its looser eligibility requirements, but that doesn’t mean approval is guaranteed. Most likely, if you are declined, it is because you either don’t meet the minimum requirements or don’t have a revenue stream that could handle the higher payments.
Because Fundbox has high interest rates and an aggressive repayment schedule, you will need consistent high revenue to ensure your account can cover the automatic payments.
Fortunately, many lenders work with younger businesses or those with lower credit rates. Business lenders might offer a broader range of products to help you solve your credit line or business loan needs.
Working with one of these lenders could help you avoid the high fees and payment schedule. However, you might need to provide more documentation, and getting funded could take longer.
Finding another company that could approve and fund your loan or line of credit as quickly as Fundbox would be tough. The convenience of applying makes Fundbox an excellent online lender option for newer businesses or those with low credit scores needing immediate funding solutions.
The high interest rates are a drawback, but if a company can use the funds to create a profit, it could be worth it. More established businesses with better credit scores could avoid the higher fees of Fundbox with a more traditional business line of credit. Based on user reviews and our dealings with Fundbox, we recommend trying them out and give them a rating of 4 out of 5 stars.
Disclaimer: The Fundbox trademark is owned by Fundbox and its use herein is for reference purposes only and it does not indicate sponsorship or endorsement from Fundbox.
