Small business owners considering a merchant cash advance might be interested in The Fundworks. It provides a quick and easy application with funding available the day after approval.
However, it can be an expensive way to borrow money. Business cash advances are typically used when a business owner needs quick funding but can’t access a traditional loan due to a low credit score or a short time in business.
We can help you decide if Fundworks is right for your business by breaking down the pros, cons and how to apply. Specifically, we’ll answer these questions and more:
The Fundworks, LLC., is a financial services company that directly funds merchant cash advances (MCAs). The funder states it aims to build lasting relationships with its small business clients.
Its mission statement is the following:
“The Fundworks finances America’s small business growth engine by providing the necessary resources to our merchants, being the capital provider of choice for our partners, and fostering an environment of learning and personal growth for our employees.”
The company launched in 2015, and its headquarters are in Salt Lake City, Utah.
Fundworks is an MCA provider. This form of financing provides a large sum upfront, which is repaid with future receivables.
The amount you receive is usually based on previous sales history. This form of financing is short-term and is generally repaid within 6 -18 months.
Small business owners often turn to MCAs for two reasons. One, you can typically get approved with a low credit score. This is because repayment comes from your future sales, so funders value your sales record more than your debt repayment history.
Secondly, MCAs provide fast funding, and Fundworks is no exception. You could potentially receive approval within a few hours and your funds the next business day.
The funder doesn’t publish requirements to apply other than six months in business. Some reviews suggest you need the following minimums:
MCAs are expensive ways to borrow money. While Fundworks doesn’t publish rates, most MCA companies use a “factor rate” to determine interest.
Factor rates are easy to calculate, but you usually can’t save interest by paying them early. Some MCA companies charge an early repayment fee.
Most companies charge factor rates somewhere between 1.1 and 1.5. To calculate your interest, multiply the advance amount by the factor rate.
If you received a cash advance for $250,000 at a 1.25 factor rate, the formula would be:
$250,000 X 1.25 = $312,500. You’d pay $62,500 in interest to borrow $250k.
The Fundworks has a robust business loan affiliate program. It aims to partner with business loan brokers and independent sales organizations (ISOs), who can offer the funder’s services to their merchant clients.
Partners and brokers can bring qualified leads to the funder and receive commissions once the client gets funds. It also offers a syndication program where the ISO remains with the client throughout the underwriting and funding process. Fundworks provides assistance during the process.
The application process is quick and easy. Follow these steps to apply.
The only application requires information about you and your business. You’ll enter your name, phone number, email, and address. Then you’ll enter the following information about your business:
The funder’s website indicates you can get pre-approved within a few hours. After that, you’ll likely speak to someone at The Fundworks to discuss your advance and business needs. You might be required to submit documentation like your ID and business bank account statements.
Once approved, the company wire transfers your funds to your business bank account the next day.
Borrowers repay the merchant cash advance with a daily percentage of revenue. The percentage it takes is set up to ensure you repay the amount due within 180 days.
You must contact the company to get your remaining balance. There’s no way to check it online or through a customer portal. We recommend keeping track of your balance and payment history independently.
Existing customers can also request a renewal through the company’s website. Renewal is at the discretion of the funder, and you must qualify each time.
While there’s no set renewal threshold, online reviews indicate most borrowers are eligible for renewal after repaying 40% of the amount due. It does not state if renewal carries benefits such as more significant borrowing amounts or lower rates.
However, the company does make it a point that they aim to be a long-term partner for their clients. Several user reviews mention renewing with the company through multiple rounds.
The primary benefit of all merchant cash advances is that you can get fast funding with a low credit score. The Fundworks is no exception but has a smaller range of factor rates, meaning its rates don’t go as high as some MCA companies. Overall, the cost is comparable, though.
Merchants get a convenient online application with pre-approval possible within a few hours. You can also request renewals through the website.
The most significant drawback is the cost. While it’s not as costly as some, merchant cash advances are one of the most expensive forms of business funding.
Not only are the rates high, but you must repay the advance in a shorter period and make daily payments. The total costs could disrupt cash flow.
Here’s a summary of the benefits and drawbacks of Fundworks.
Yes, Fundworks is a legitimate merchant cash advance company. It has an A+ rating at the Better Business Bureau (BBB), although it is not BBB accredited.
There are very few customer reviews available online. Fundworks doesn’t have any BBB reviews or complaints and doesn’t have a page on Trustpilot.
However, it does have a 4.6 out of 5 rating on over 100 Google reviews. Most reviews are positive, but there are a few negative ones.
The positive reviews discuss the funder’s customer service and the ease of the application and funding process. Multiple reviews called out their representatives by name.
Another common theme in the positive reviews is the fast funding time. Multiple customers have renewed with the company and would recommend them.
Negative reviews complain about difficulty reaching customer service. Several complaints were about being denied a merchant cash advance or renewal.
One customer complained that the company continued withdrawing from their account after the MCA was paid off. However, Fundworks replied to claim that it has no record of doing business with the customer and that it would never continue withdrawals. There are several reviews where Fundworks claims it has no record of the customer and the review is fake.
Merchant cash advances are very accessible, but there’s no guarantee you’ll get approved. You might be denied due to issues with revenue, credit history, or being in a restricted industry. Fundworks doesn’t work with certain industries, but doesn’t list which ones. It states you should contact them to see which industries are restricted.
The denial letter should explain why you were declined. You can contact the funder directly if you need more information.
Whether you were denied a merchant cash advance or decided Fundworks isn’t suitable for you, there are plenty of lenders available. There is no shortage of merchant cash advance providers, but you might want to consider other small business loan options, especially if you have decent credit and don’t need funding.
Here are some other available small business financing options:
The Fundworks is best suited for merchants with a low credit score who need quick funding and are willing to pay more to get it. While all MCAs carry high costs, the funder’s factor rates are lower than some.
In addition, it’s a good fit for merchants who want to establish a lasting relationship with their MCA provider. Many companies use MCAs as bridge financing until they improve their credit and establish enough business history to qualify for more advantageous business loans.
Business owners with good to excellent credit and an established business history who don’t need urgent funding could find less expensive options elsewhere. It might be possible to find other fast business loans with a lower cost than MCAs.
Based on user reviews, the usability of the website, and available products, we rate The Fundworks at a 4 out of 5. It’s one of the more reasonable MCA options, but the lack of other financing products holds it back.
Disclaimer: The Fundworks trademark is owned by The Fundworks, LLC and its use herein is for reference purposes only and it does not indicate sponsorship or endorsement from The Fundworks, LLC.