Editor’s note: NerdWallet’s Step by Step series gives small-business owners a behind-the-scenes look at the loan application processes of various online lenders. We show you what you can expect, screen by screen, as you submit your application.
U npaid invoices can be a drag on your small business, especially when they start piling up.
BlueVine offers a way to access that capital by advancing you a big portion of payments you’re expecting from customers.
This type of financing — known as invoice factoring or accounts receivable financing — is more expensive than a bank loan or other kinds of online business loans. But for small businesses that deal regularly with piles of unpaid invoices, it’s a good way to plug short-term cash-flow gaps.
BlueVine recently launched a line of credit, which gives you access to funds to draw on as needed. The company also offers invoice factoring for truckers and trucking companies.
You can read more about BlueVine in our review.
The application process can be complicated, even for small-business owners familiar with factoring. Let’s go through the steps.
Table of Contents
Adding your bank and accounting system
Adding details to your BlueVine profile
Getting cash for your unpaid invoice
Invoice factoring isn’t for everyone
BlueVine loan application: Summary
Time: Creating an account takes minutes. If approved, you could get funded in a day. For BlueVine’s new line of credit, the approval process could take two to eight hours, and you could begin accessing funds in an hour once approved.
Documents needed: Bank account statements or electronic access to your bank account.
| BlueVine at a glance | ||
|---|---|---|
| Invoice factoring | Line of credit | |
| Cost of funding | 23% to 61% APR | 16% to 26% APR |
| Loan amount | $5,000 to $250,000 | up to $30,000 |
| Loan terms | 1 to 12 weeks | 6 months |
| Minimum qualifications |
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| Profile of typical borrower |
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1. Signing up
It takes just a couple of minutes to set up a BlueVine account.
You’ll need to state the amount and type of financing you need. BlueVine has begun offering a line of credit in addition to its invoice financing option. (More on BlueVine’s line of credit below.)
In the next box, you’ll need to fill out a form with basic personal information, including your Social Security number.
2. Adding your bank and accounting system
You will then be asked to provide details of a bank account where you deposit payments, by check or automatic electronic delivery, from your customers. You will need to give BlueVine access to that account, either by providing your bank account details or uploading a recent bank account statement.
Once you complete this step, a window will pop up to ask you for your invoicing software. The four choices you’ll see are QuickBooks online, FreshBooks, Xero and QuickBooks Desktop. If you use any of these, you have the option of integrating your online account with BlueVine, so you could easily transmit information on invoices for factoring.
Maybe you’d rather not integrate these accounts, or you use a system not supported by BlueVine. Or maybe you don’t use invoicing software.
No worries, says Ed Castaño, BlueVine’s vice president of marketing. You also can create your own invoices to submit through the site, he says.
Once you’ve filled out the first two boxes, you’ll have a basic BlueVine profile.
3. Adding details to your BlueVine profile
You can add more information. In fact, BlueVine encourages you to do so. For example, you could add your state of incorporation, your website and other company information, and even a profile picture.
The more information you share with BlueVine, the greater your chances of getting a better deal, including a lower APR, Castaño says.
Like other online small-business lenders, BlueVine uses online data, including private accounts that you decide to share with the company, and public ones, such as your company website, to evaluate your creditworthiness and the financial health of your business.
BlueVine will do a soft pull of your credit record as it evaluates your application. A hard inquiry will be done only when you accept a loan offer, according to Castaño.
Expect a phone call from a BlueVine financing advisor within 24 hours of entering your information on the sign-up page, Castaño says. Once your account is approved, BlueVine will assign a “client success manager” to work with you.
Larry Eder, publishing director and owner of content and marketing services company Fortius Media, told NerdWallet recently about his experience applying at BlueVine. Eder says he didn’t have to wait long to hear from a BlueVine advisor. He got a call within two hours of setting up an account.
4. Getting a new bank account
Before you can submit invoices for factoring, you must change the way your customers pay you.
BlueVine will set up a bank account and a P.O. box for your BlueVine account. You must then instruct your customers to send their payments to that account or P.O. box.
This is how you repay the cash advance. BlueVine will receive the payments from your customers. Then, after deducting the fees based on the agreed rate, it will wire you the balance of your invoice. More on this later.
But once you’ve set up the new payment system for your customers, you’re ready.
5. Getting cash for your unpaid invoice
When you click on the “Add an invoice” button, a box appears, asking you to type in the customer name, the amount on the unpaid invoice, the invoice number, date, due date and a description of the transaction.
If you’re using one of the accounting programs supported by BlueVine and you opt to integrate your accounts, you simply choose the customer and invoice you want to submit for factoring.
If you’d rather not integrate your accounts, if you don’t have an online accounting system supported by BlueVine, or if you don’t use a web-based bookkeeping program, you can submit invoices manually.
You’d need to create profiles for your customers before submitting invoices.
For each approved invoice, BlueVine will advance you 85% of the total amount.
Let’s say you submit an unpaid invoice for $1,000. BlueVine would send you $850 upfront. You should get the funds via electronic deposit within a day or two. If you want to get the funds sooner, you could request a wire transfer and get the funds in a few hours — but there’s a $15 fee.
You pay back the advance when your customers pay you by sending funds to the BlueVine bank account or the P.O. box BlueVine set up for you.
BlueVine then deducts the fees for its service before sending the balance of the invoice to your bank account.
If you’re a new client, BlueVine will charge a weekly fee of 0.5% to 1% of the invoice amount. For existing clients with a good record, BlueVine reduces the fee to 0.3%.
With the $1,000 invoice example, you would get an $850 advance. If your weekly rate is 1%, and your customer pays the BlueVine account in four weeks, you’d pay $40 total.
So once your customer pays the $1,000, BlueVine would deduct the $850 advance and the fee before sending you the remaining $110.
BlueVine will not require you to submit a minimum number of invoices, unlike traditional factoring companies.
“In the old days, they took over everything,” says Eder of Fortius Media Group. “With these guys, you select. That’s the beauty of it.”
You could choose to submit just one invoice one month, several more the next month, and then not turn in anything after that. Your account would not be penalized or closed. You’d only need to keep your bank account details up-to-date.
6. BlueVine and your customers
Unlike with traditional factoring, you will be responsible for making sure your customers pay you. You will have to ask them to send their payments to a P.O. box or a bank account that BlueVine has set up in your name.
If they pay by check or electronic deposit, the payments could be made in your name or to BlueVine. Some small-business owners prefer payments in their name to avoid confusing their customers.
In some cases, such as with larger invoices, borrowers would be required to make payments to BlueVine.
If your customers send the payments by wire transfer, they must be made to “BV Payments.” BlueVine also offers a summary of these payment options on its site.
BlueVine will expect to get its money back by the due date you put down on the “new invoice” box. If your customer’s payment is late, BlueVine will give you an extra two weeks past the due date.
If your customer fails to pay, you’ll have to pay back the invoice. After two weeks past the due date, there’s a late fee of 3%, although a BlueVine representative says that can be waived if the balance is paid within a week.
You can keep track of your submitted invoices and other transactions on your account page.
7. Line of credit option
BlueVine’s invoice financing works mainly for small businesses that sell products or services to other businesses. If you’re a manufacturer supplying a major vendor, or a catering or cleaning company that serves big customers, BlueVine is worth considering.
If your small business serves consumers or doesn’t produce that many unpaid invoices, you could also apply for a BlueVine line of credit. You’ll see that option as you’re setting up your account.
BlueVine’s Flex Credit, which was unveiled in April 2016, offers financing of $5,000 to $30,000, with fixed repayments for each draw over six months. Unlike BlueVine’s invoice financing product, Flex Credit is available to all kinds of small businesses, not just B2B firms. New borrowers can get approval and funding within 24 hours. The APR is 16% to 62%, roughly in line with BlueVine’s invoice factoring rates of 23% to 61%.
You’d need to have been in business at least six months, have monthly revenue of at least $5,000, and a FICO score of at least 600. As with BlueVine’s invoice factoring option, you’d need to provide access to your bank account or submit three months of bank statements.
Once approved, you would get access to approved funds and draw on your credit line as needed. Your available credit replenishes as you repay outstanding funds.
8. Invoice factoring isn’t for everyone
There are other reasons invoice factoring may not work for your small business.
One is the strength of your business. If you have a steady and robust revenue stream, BlueVine invoice factoring can help you plug cash-flow gaps. But it could also eat into your profits if your revenue flows are weak or inconsistent.
“If you have a strong business, factoring can help you,” Castaño, the BlueVine vice president, told NerdWallet in a 2015 interview. “If it’s weak, it can put your business in a downward spiral.”
Another important consideration is your customer base. BlueVine customer Eder also offers this advice: Make sure you have good, reliable customers.
“The key is having good clients,” he says. “If you have good clients, BlueVine is a nice option for you. … The fees may be a little bit more. But the big thing is it’s easy to manage.”
For that, Eder says, he’s willing to pay a little more.
To apply
If BlueVine sounds like the right fit, apply on the lender’s secure site:
Find and compare small-business loans
If BlueVine is not right for you, consider other small-business loans using NerdWallet’s comparison tool. We gauged lender trustworthiness and user experience, among other factors, and arranged the lenders by categories that include your revenue and how long you’ve been in business.
Compare business loansBenjamin Pimentel is a staff writer at NerdWallet, a personal finance website. Email: bpimentel@nerdwallet.com. Twitter: @benpimentel.
To get more information about funding options and compare them for your small business, visit NerdWallet’s small-business loans page. For free, personalized answers to questions about financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.
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