Fundbox is the best factoring service for startups because it has few minimum requirements, advances 100% of an invoice and is transparent with its pricing. Furthermore, this factoring service does not consider your personal credit history or the age of your business, making it ideal for new business owners.
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Fundbox Rates and Fees
One of Fundbox's best qualities is its transparent pricing. Before you factor an invoice, the company shows you the exact fee you will pay for that specific invoice, so you won't be caught off guard when you repay the advance.
Fundbox does not dock you with monthly minimum or prepayment penalties, allowing you to repay your advances early. In fact, if you are able to repay advances ahead of schedule, Fundbox waives your remaining fees. It does not make you sign a lengthy contract, unlike many in the factoring industry.
On a 12-week term, Fundbox fees start at 4.66% of your invoices per week. For a 24-week term, that percentage jumps to 8.99% per week. Unlike most factoring services, Fundbox advances 100% of the value of the invoice. However, you repay the company a prorated portion of the invoice each week, plus a fee.
Fundbox has low minimum requirements, making it a viable financing option for startups that have poor credit or lack a long credit history. These are the four minimum requirements:
- Your business must be based in the U.S.
- You must have a business checking account.
- Your business must earn at least $50,000 per year.
- You must use supported accounting software with at least two months of activity and five invoices per month or have three months of business transactions in a business bank account.
One of Fundbox's greatest strengths is that it works with all industries, including medical, freight and construction industries. Additionally, the factoring service doesn't require collateral or personal guarantees.
Fundbox doesn't consider the personal credit scores of you or your customers. However, it may conduct background checks on you and your business's leadership team when you create an account.
Even with its minimal requirements, Fundbox advances 100% of invoice values, which makes it the best factoring option for startups that are too small to work with most other factoring companies.
Ease of Application
Fundbox's application process is easy and straightforward. You can quickly create an account without speaking to a customer support representative. All you need is your business email, phone number and a password. When you sign up, you don't need to provide tax forms, financial statements or other legal documents.
When you are ready, you connect your newly created account with your business's accounting software. Fundbox currently supports these accounting software options:
If you don't use one of these accounting programs, Fundbox also offers lines of credit for businesses.
After you connect Fundbox to your accounting software or business bank account, it analyzes the data to evaluate the legitimacy of your business. You need at least three months of data to factor invoices through Fundbox.
To evaluate this factoring company, we called Fundbox posing as a small business owner. We had mixed results with Fundbox, as our calls on Friday afternoons routinely went to voicemail. Our calls on Monday mornings were more successful: We reached a representative right away.
Although Fundbox doesn't offer 24/7 customer service, phone support is available between 8 a.m. and 8 p.m. EST, Monday through Friday. Fundbox will respond to your emails within 24 hours, which is faster than some other companies we evaluated.
Fundbox has a helpful blog, FAQs page and support center that covers numerous topics, including pricing terms, payments and security. There are also tutorials on how to get started, use the dashboard and set up your accounting software.
Standout Feature: Transparent Pricing
Fundbox is one of the most transparent factoring services with its pricing. Regardless of what kind of business financing you pursue, transparency is a key feature to look for. When you select an invoice to factor, Fundbox presents you with the total amount you'll pay before you even accept the advance. This can help you strategically select which invoices to factor.
Furthermore, there are no application, origination, due diligence or maintenance fees. According to our conversations with customer support representatives, you pay $7 a week for a $1,000 advance on average, though your rates may be higher or lower depending on your agreement. This weekly price is somewhat higher than the website's calculator estimates for the same amount ($3.88). However, if you can repay the advance early, there's no early repayment penalty, and Fundbox waives the remaining fees for the weeks left on your term.
Although Fundbox is the best factoring service for startups, there are a few drawbacks to consider before working with this company:
- Fundbox is more expensive than other lending options.
- The maximum advance is $100,000, which is a relatively small amount that may not solve your cash flow problems.
- You must repay weekly, rather than per invoice, which means you have to keep a close eye on your business bank account every week.
- Late fees add up quickly and can significantly cut into your profit margin if not dealt with immediately. If you make a late payment, expect to pay three times the weekly fee on top of an ACH missed payment reimbursement fee.
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