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Fundbox Review: Best Factoring Service for Very Small Businesses

Fundbox Review: Best Factoring Service for Very Small Businesses
Credit: Fundbox

We recommend Fundbox as the best invoice financing for very small businesses. We chose Fundbox from dozens of factoring services. To understand how we made our decision, you can read our methodology and a list of factoring services on our best picks page.

We chose Fundbox because it provides access to invoice financing to very small businesses and early stage companies that otherwise might not be able to obtain financing. Fundbox also makes payments quickly and offers a transparent pricing structure. Working with the company is also a plus, as customer service is top notch and Fundbox maintains a simple repayment plan.

Fundbox costs 5 to 7 percent of the invoice value, plus $5 to $10 per $1,000 in invoices. The company funds 100 percent of the invoice value up front. Minimum requirements include being in business for at least six months. There are no credit checks, and the company doesn't consider your annual revenue.

We like Fundbox because it offers fast funding with a low barrier to entry. This makes it ideal for very small businesses, as it is easier to qualify for than many factoring services. And despite its lax requirements, Fundbox funds 100 percent of invoice values. That makes it an excellent choice for businesses that are too small to be accepted by most factoring companies but still need a financing solution to keep cash flow going when customers have yet to pay their invoices. 

Fundbox has three very simple minimum requirements:   

  1. Your business must have been in operation for at least six months.
  2. Your business must be U.S.-based with U.S.-based customers and invoices in U.S. dollars.
  3. You must use supported accounting software to create and send invoices (see below).

Fundbox does not consider factors that often automatically disqualify very small businesses from obtaining invoice financing. Unlike traditional factoring companies, Fundbox doesn't have any minimum revenue requirements and does not exclude businesses from certain industries, nor does Fundbox require any collateral or personal loan guarantees. The company also does not consider business owners' (or their customers') personal credit scores, either. 

One of the best things about Fundbox is that it has a very easy three-step application process:

  1. Sign up for a free account at fundbox.com.
  2. Connect your accounting software and bank account.
  3. Select invoices that you wish to be funded.

This means there are no financial statements, tax forms, legal documents or other paperwork required to set up an account, and you don't have to speak with anyone at the company in order to get started. 

To sign up for an account, all you'll need is your business email address, business phone number and a secure password. 

To connect your accounting software, you'll need to use one of the services Fundbox supports: Intuit QuickBooks, FreshBooks, Xero, Wave, Sage One, Clio, Harvest and InvoiceASAP. 

Fundbox uses the data from your accounting software to see unpaid invoices and fund your checking account, as well as to determine the legitimacy of your business, calculate risk and approve invoices. You'll need at least three months' worth of accounting data on one of the supported software programs in order for invoices to be considered. 

Editor's note: Looking for information on factoring services? Use the questionnaire below, and our vendor partners will contact you to provide you with the information you need:

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To help us further compare Fundbox to its competitors, we called the company, posing as business owners. We asked company representatives how their invoice financing works and what makes it stand out from other factoring services. 

We like that Fundbox works fast to help very small businesses that are struggling with cash flow. Imagine that you need to buy supplies, purchase inventory or pay your staff ASAP, but your customers are taking forever to pay their bills. You can submit outstanding invoices online from your accounting software, and Fundbox will advance you the funds in about a day, upon approval.

In addition, what distinguishes Fundbox from most factoring services is that its invoice financing service advances the full amount owed on invoices, whereas most factoring services will cover only 70 to 90 percent. And unlike most factoring services that require customers to pay them directly as a third party, your customers don't even have to know you are using invoice financing to keep your business going. Customers will still be paying you, and you'll be paying Fundbox for their unpaid invoices.

Another reason we like Fundbox is it has very simple repayment terms that are a lot like those on traditional loans. Instead of the large lump-sum payments that are common of many factoring services, Fundbox has more microbusiness-friendly repayment terms using 12 weekly installments.  

The Fundbox representative we spoke with said repayments are made automatically every Wednesday via ACH (Automated Clearing House), starting one week after you have received the funds. Payments include one-twelfth of financing fees per week. You also have the option to pay early, and Fundbox will not charge any prepayment fees and will even waive any fees for the remaining weeks. See below for more information on fees.

Fundbox wins when it comes to transparent pricing, which is critical for very small businesses that don't have the resources to deal with complex fee structures and penalties. You'll also know the total amount you'll be paying before you accept an advance.

Here's how Fundbox's pricing breaks down:

  1. Invoice value — the amount that Fundbox paid you to cover unpaid invoices
  2. Advance fees — 5 to 7 percent of the invoice value*
  3. Transaction fees — $5 to $10 per $1,000, depending on your banking institution

Fundbox has no origination fees or maintenance fees.  

* To give you an idea of Fundbox's advance fees, $50 to $60 is a good estimate on a $1,000 invoice, Fundbox's rep told us. Although this is higher than the fee for a traditional loan from a bank, this rate is lower than those charged by factoring services, which run upward of $75 to $100 on a $1,000 invoice. Fundbox's advance fees can be offset by paying early, as there are no prepayment penalties. Many businesses also pass this cost along as late fees to customers who are running behind. 

As a very small business — and because you're dealing with money — you can't afford to deal with shady factoring companies. So we looked into how Fundbox's customers feel about the service, and the consensus is that Fundbox is an honest, small-business-friendly company that many customers are happy with. Not only does the company help business owners save their cash flow, but the easy, fast financing and great customer service make the entire process even better, customers say.

In addition to the positive reviews on Fundbox's own website, we looked at sources such as the Better Business Bureau (BBB), Trustpilot and GetApp. Here's what we found:

1. BBB — Fundbox has been accredited with the BBB since April 29, 2014, and has an A+ rating. There have been only two complaints in the past three years, both of which deal with billing and advertising issues. These complaints were quickly addressed by Fundbox and have since been resolved. 

2. Trustpilot — Customers rate Fundbox an average of 5 stars out of 5, with reviews from nearly 250 customers who praise Fundbox's reliability, transparency, excellent customer service, easy application process and fast funding. The company has an Excellent rating of 9.8 out of 10.

3. GetApp — Fundbox currently has a rating of 4.76 out of 5, with reviews from 59 verified customers. As in the reviews on Trustpilot, customers on GetApp rave about Fundbox's simplicity, easy application process, fast payments, customer support and value for their money. The few negative comments deal primarily with the repayment terms; some customers say the 12-week terms are too short, and some don't like the limits on funding amounts that you can take out at one time.

Like the customers who reviewed Fundbox on the sites we mentioned, we had a great experience with the company's customer service. We called Fundbox, posing as potential customers. We were able to get ahold of a representative right away who also patiently answered our many questions about how the service works, the rates and the payment terms. 

Although Fundbox doesn't offer 24/7 customer support, phone support is available during expanded business hours of 8 a.m. to 9 p.m. ET on Mondays and Tuesdays, and 8 a.m. to 8 p.m. ET from Wednesday to Friday. There are also two toll-free numbers — a main line and a resolutions line (depending on your concerns). 

You can also reach Fundbox via email or by messaging the company at fundbox.com; a representative will get back to you within 24 hours. 

In addition to one-on-one support, the Fundbox website has an extensive searchable FAQ page with dozens of articles and help topics that address a wide range of topics. These include how to get started with Fundbox, how to use the Fundbox dashboard, pricing terms, payments, security and how to set up your accounting software.

Although we are fans of Fundbox, its funding and repayment caps may be too limiting for some businesses, and some business owners may be concerned that Fundbox has a limited track record. 

Fundbox has a minimum funding of $100 and a maximum of $25,000. These amounts are likely good enough for most microbusinesses that don't need a lot of cash or don't want to take out huge loans. But if you're in a business or industry that deals with high-value goods (such as technology or fine jewelry) or provide costly services (such as consulting or medical practices), you may need to find a factoring service with much higher funding caps, such as BlueVine or American Receivable. You can also check out our best picks page for a comprehensive list of factoring services. 

Second, some microbusinesses may have trouble with Fundbox's firm 12-week repayment plan. Because the funds are deducted automatically from your checking account, you may end up with even more cash flow problems if your customers have yet to clear their invoices at the end of this 12-week period. 

The good news, however, is that Fundbox works like a line of credit. This means that as you repay what you owe, you can keep borrowing by submitting more invoices as you go. For instance, if you take out a $10,000 invoice advance and then pay $5,000, you can finance another $5,000 worth of invoices. The Fundbox rep we spoke with said your available credit will also go up the more you use Fundbox, although we weren't able to verify an exact amount, as credit increases are made on a case-by-case basis.

Lastly, as mentioned in the BBB rating above, Fundbox has only been around for a couple of years. Although there are currently no negative reviews or any incidents that raise any red flags, some business owners may prefer to deal with a factoring service that has a much longer track record of reliability. If that applies to you, check out DSA Factors (1964), Goodman Factors (1972), Merchant Factors (1985), Catalyst Financial (1994) and more from our best picks page.

Additional reporting by Adam C. Uzialko.

Ready to choose a factoring service? Here's a breakdown of our complete coverage:

Editor's note: Looking for information on factoring services? Use the questionnaire below, and our vendor partners will contact you to provide you with the information you need:

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Sara Angeles

Sara is a tech writer with a background in business and marketing. After graduating from UC Irvine, she worked as a copywriter and blogger for nonprofit organizations, tech labs and lifestyle companies. She started freelancing in 2009 and joined Business News Daily in 2013. Follow Sara Angeles on Twitter @sara_angeles.