Fundbox Launch Provides SMBs with Financing Alternative
The marketplace for non-traditional lending is thriving. Consumer peer-to-peer lender LendingClub, which has plans for an IPO later this year, opened the doors for other companies to start offering alternative financing options in other markets like small business.
Startup’s like Kabbage and OnDeck have experienced explosive growth meeting the needs of small businesses whose needs fall short of most banks minimum-lending threshold of $250,000.
Last week, niche alternative finance company Fundbox announced its official launch after raising $17.5 million through venture capital fund Khosla Ventures. Differentiating itself from competitors, Fundbox is geared specifically towards one market; business-to-business firms that require advance funds to meet unpaid invoice liabilities.
According to the company, the B2B sector is a $72 trillion market, over 24 times bigger than the business-to-consumer space.
Shortfalls in cash flow that are associated with past-due invoices can be crippling to a fledgling business that needs timely payments in order to process payroll, buy inventory, and manage day-today operations. FundBox provides a solution with fast and easy cash advances.
Loan amounts range from $100 to $10,000 and are repaid with a clearing fee over 12 weekly installments.
Applying for a loan is simple; customers simply connect their accounting software to the website and select what invoice they would like an advance on. Clearing fees are charged based on risk assessments performed by analyzing the applicant’s financial strength and customer demographics.
An automated risk engine scans for information from multiple sources in order to paint an accurate portrayal of a company’s ability to repay the loan. The scan takes around 50 seconds and doesn’t require an actual person to review, giving FundBox an advantage over traditional underwriting processes that can take several days to complete.