If you’re in the storm restoration business, you know it’s dangerous work and that it tends to come in short bursts. As a result, you often find yourself in an extremely tight spot in the aftermath of a big storm or natural disaster. You have large outstanding invoices with a utility but at the same time, you’ve exhausted your working capital.
And now, you’re facing a 90 to 120 day wait for payment. In the search for bridge financing, you’ve likely considered bank loans, lines of credit, invoice factoring or invoice financing. Fundbox offers both line of credit and invoice financing products. But are they the real deal? That’s what we’re here to find out.
What is Fundbox and What Does it Offer?
Fundbox has been around since 2013 and was launched with an eye on providing financial products to small businesses. The company’s two primary products are their relatively new line of credit which they call “Direct Draw” and their invoice financing product named “Fundbox Credit.”
Their line of credit hasn’t been in play long enough to draw any definitive conclusions about it. So for the purposes of this piece, we’re going to focus on their invoice financing product and see how it stacks up against Payost.
Fundbox Qualification Requirements
Let’s state right up front that, unlike Payost, Fundbox doesn’t simply pay off your outstanding invoices. It provides advance funding in the form of a loan that you must agree to pay back with weekly payments over the course of 12 to 24 weeks. That said, the requirements to receive their invoice financing loan are:
- Minimum company revenue of $50,000.
- The ability to prove at least 3 months history using approved accounting software.
- Willingness to provide Fundbox with access to that software.
- Willingness to allow Fundbox to make weekly automatic withdrawals from your company bank account.
That’s about it. They say there aren’t any minimum requirements regarding how long you’ve been in business. But since you have to prove at least a 3-month history with the right accounting software then it’s fair to say you have to be in business for at least that amount of time.
How Does Fundbox Work?
Fundbox works by providing short-term loans against your outstanding, qualifying invoices. These loans must be repaid on a weekly basis starting immediately. That’s in contrast to Payost, whom you reimburse in full only after the utility has paid the invoice.
While Fundbox loans don’t charge origination, maintenance or termination fees–they don’t have to, since the interest on their invoice financing can wind up being as high as 78.6%.
“Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1.” - Warren Buffett
The Application Process
Fundbox advertises its services as a way to help smooth out cash flow problems. However, storm restoration companies may find that this type of advance funding winds up doing more harm than good. But more on that in a minute.
The Fundbox process isn’t complicated and is available to large and small companies as well as freelancers. The process of obtaining Fundbox funding is entirely automated and involves the following steps:
- First, go to their website and create an account by entering your email address, bank account info, and other required data before choosing a password.
- Second, connect your qualifying accounting software to Fundbox and upload the unpaid invoices you would like them to consider financing.
- Pick one of those invoices that you would like them to clear first.
- Once verified, Fundbox transfers the amount of the invoice directly into your bank account during the next business day.
- After 1 week, you start the weekly payments which will be deducted from your account.
Keep in mind that while Fundbox says they don’t perform a credit check, they nonetheless perform background checks on both you and your business. The results of that will affect whether they do business with you. And if they do, it also influences how much interest you’re charged.
Let’s review Fundbox now by taking a look at the pros and cons of their invoice financing service. Then we’ll compare the Fundbox model to the Payost model and see how they stack up against each other.
- No credit check.
- No real application process–just create an account.
- Fast disbursement of funds once approved.
- Entirely automated process.
- Requires compatible accounting software.
- Their fees can add up in a hurry.
- You must commit to weekly installments.
- Maximum financing fee of $100,000.
- You have to allow them access to your bank account.
- You may wind up paying nearly 80% interest.
If you own a storm restoration company and have outstanding invoices with utility companies, do you really want to commit to weekly payments and interest that might take up as much as 80% of your income?
Fundbox vs Payost Comparison
By now, one thing should be clear: Fundbox may not be an invoice factoring company but they don’t do invoice financing either. What they are is a company that floats you for the short-term using high-interest loans based on the value of your outstanding invoices. Their service can be summed up in a few brief bullet points below:
- They’re (relatively) easy to open an account with.
- They float you a high-interest loan of up to $100,000 if your invoices qualify.
- They make weekly deductions from your bank account until the loan is repaid.
- Interest can be as high as nearly 80%.
Now that we know the above, let’s see how Fundbox compares to a real invoice financing company like Payost.
- There is no credit check.
- Approval is based on the creditworthiness of the utility.
- Payost doesn’t provide short-term loans.
- There are no daily, weekly or monthly payments.
- You don’t need to allow Payost to access to your accounting software.
- The application process takes less than 5 minutes.
- You reimburse Payost plus a modest fee when the utility pays off the invoice.
- You’re able to restore sanity to your cash flow.
- You need to have outstanding invoices with AAA credit rated companies.
Bottom Line: Should you try Payost?
As we said at the outset, storm restoration work is dangerous. You put your life on the line every time you respond to the call for help. Do you really want to turn 80% of the money you make over to Fundbox for a tiny bit of short-term cash?
The Payost model embodies simplicity at its core and doesn’t involve punishing interest rates, weekly deductions or $100,000 limits. If you have outstanding invoices with AAA credit rated companies, we’ll pay them off for you. You can then go back to conducting your normal business affairs and when the utility eventually pays off your invoice, you reimburse us plus a fee for our services. That’s it. Go to our “Apply Now” page to get started with Payost!