Do you have customers who plan to pay you for goods or services … later? You’re not alone: 64% of small businesses have unpaid invoices that are more than 60 days old, according to a 2012 National Federation of Independent Business survey. But your company may need that money right away — to purchase inventory, meet payroll demands, pay suppliers and grow the business.
If slow-paying customers are giving you a short-term cash flow headache, one potential solution is to turn their bills into cash with invoice financing through BlueVine or Fundbox. Here’s a comparison of the two companies to give you an idea of which one may suit your small business.
| BlueVine | Fundbox | |
| Funding size | $5,000 to $250,000 | $500 to $25,000 |
| Repayment term | 1 to 12 weeks | 12 weeks |
| Cost of funds | 23% to 61% APR | 44% to 64% APR |
| Time to funding | As fast as 1 day | 1 to 3 days |
| Qualifications | Business cash flow strength, debtor strength, minimum personal credit score of 530 | Business cash flow strength, invoice history, minimum six months’ activity with a software application |
| Better Business Bureau rating | A | A |
| Apply on lenders’ secure site | Get Started
Apply via BlueVine (Read our BlueVine review) |
Learn More
Apply via Fundbox (Read our Fundbox review) |
For businesses with larger invoices: BlueVine
Get StartedApply on BlueVine’s secure site (Read our BlueVine review)
BlueVine, founded in 2013, offers a fast and easy way for small businesses to get cash for their unpaid invoices. BlueVine advances 85% of the invoice amount upfront, and you get the rest when your customer pays, minus fees. Credit lines range in size from $5,000 to $250,000.
Speed: After completing a two-page registration process and connecting your accounting software (QuickBooks, Xero or FreshBooks), customers can get cash in as soon as one day.
The costs: Rates start at 1% per week with a minimum of three weeks, and the due date for the invoice must be 12 weeks or less.
For example, on a $10,000 invoice that’s due within one to three weeks, borrowers can expect to pay $300 in net fees, or 3% of the invoice balance. The fee then increases $100 for each additional week, so if that same invoice were due in eight weeks, the total fees would be $800, according to BlueVine’s pricing calculator.
These fees are not to be confused with the annual percentage rate, or total annual cost of borrowing. The APR on BlueVine’s credit lines ranges from 23% to 61%.
But you may qualify for a reduced rate with a discount of 20% to 30% once you build a history with the company.
How to qualify: Approval is determined based on a number of factors, including your business cash flow, the financial strength of your debtors, and your personal and business credit history (your personal credit score must be higher than 530 for you to be eligible). The only industries not eligible for BlueVine financing are the medical and health care sectors.
Best uses: Businesses that may get the most out of BlueVine are those that have slow-paying customers and need help managing cash flow, whether it’s to buy inventory, meet payroll or pay for regular day-to-day expenses. It’s better for larger businesses, since you can receive up to $250,000.
For businesses with smaller invoices: Fundbox
Learn More
Apply on Fundbox’s secure site (Read our Fundbox review)
Founded in 2012, Fundbox aims to help small-business owners overcome short-term cash flow needs with advances on outstanding invoices. Fundbox typically provides $500 to $25,000, although the actual amount depends on your business’ invoice history and cash flow situation. The more you use Fundbox, the more capital you’ll potentially be able to tap.
Speed: You’ll need to create a free account and link your accounting software, which takes under a minute. Funding is fast, with money typically arriving the next day. But it could take up to three business days depending on your bank and other factors, according to the company.
The costs: Although there are no origination fees, borrowers pay both transaction and advance fees on their Fundbox loan. For example, a $10,000 advance comes with total fees of $482 to $682, and each weekly payment consists of principal, transaction fees ($5 to $10) and advance fees ($477 to $672). The APR on Fundbox loans is 44% to 64%. Fees are based on your business’ health and the amount of the invoice, and the fees decrease the more you use Fundbox. Borrowers also have the option of paying down the advance early without penalty, to limit the fees paid and lower the effective APR on the loan.
There’s one key difference from BlueVine: The advance is up to 100% of the invoice value, and it is repaid weekly over 12 installments. So instead of getting a percentage of the invoice amount upfront and the rest when the client pays you (less a fee), you get all of the money upfront and begin making weekly repayments eight days after you’ve cleared the invoice.
How to qualify: To get approved for Fundbox, you must use online accounting software that can be linked to the Fundbox website (QuickBooks, Xero, Harvest, FreshBooks or Wave) and have a minimum of six months of activity in one of these software applications.
Best uses: Small-businesses that have slow-paying customers and need help managing cash flow but who don’t want to finance more than $25,000 in unpaid invoices.
Should you go with BlueVine or Fundbox?
BlueVine and Fundbox are legitimate invoice financing options for small businesses. Both companies provide a fast and easy application process, rapid funding and similar costs.
The key difference is how you’ll repay the funds. At Fundbox, you get up to 100% of the invoice value and repay it in 12 weekly installments. At BlueVine, you get 85% of the invoice amount up front, then the rest when your client pays, minus fees. BlueVine also finances much larger amounts than Fundbox.
Find and compare small-business loans
NerdWallet has come up with a list of the best small-business loans to meet your needs and goals. We gauged lender trustworthiness and user experience, among other factors, and arranged them by categories that include your revenue and how long you’ve been in business, so that you know which loans you qualify for.
Compare business loansSteve Nicastro is a staff writer at NerdWallet, a personal finance website. Email: Steven.N@nerdwallet.com. Twitter: @StevenNicastro.
The post was updated. It was originally published on Feb. 2, 2015.
Image via iStock.
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