Getting a Small Business Loan Gets Easier
There was a time when the words “convenient banking” meant your local bank installed a new ATM. These days, however, with the introduction of Fuse from Fundbox, it means banking at the touch of a button, wherever you are, whenever you need it.
Fundbox Fuse is an integration Fundbox is offering solutions partners (five at launch, to be expanded to more) that enables them—on their own websites—to offer their customers nearly instant access to cash.
Fundbox is an on-demand credit solution that lends based on the health of your business and doesn’t require FICO to get approved. To get started, a small business connects its accounting software or business bank accounts and Fundbox, using machine learning technology, quickly analyzes your financial data and then delivers a credit decision within a few hours. If approved, Fundbox can provide access to up to $100,000, and customers only pay when funds are drawn.
Fundbox Fuse launched to address one of the biggest challenges small businesses face: cash flow. According to the company, 84% of small businesses say they can’t get the amount of funding they need, while 23% say “budget constraints” is their number-one concern this year. What’s more, Fundbox reports, small businesses have an average profit margin of around 7.5% and most only have 27 days of cash on hand to fund operations.
So Fundbox set out to “democratize access to credit” by creating a network of partners that embed on their websites, with a few lines of HTML code, a button their customers can “press” to get access to cash via Fundbox. It’s essentially a win-win-win situation—for Fundbox, its partners, and small business owners. As Sebastian Rymarz, Fundbox chief business officer told American Banker, “Small business owners are completely strapped for time. They don’t want to think about managing a gazillion apps, so we’re trying to embed ourselves in the workflow of partners they like.”
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Constructing a new funding model
This option is a panacea for small businesses in general. But for some specific industries, the need for cash flow is exacerbated. Take construction, for example. According to Marc Visent, co-founder and CEO of Knowify, a platform and business management program for construction businesses, contractors often find themselves in need of cash due to the seasonal ebb and flow of their businesses.
Visent grew up in Europe in a family involved in construction and witnessed firsthand “how painful and unreliable” the industry can be. Because, as he says, “Europe wasn’t ready for change,” Visent moved to the United States to launch Knowify in 2015. In America, he notes, millennials were taking over family-owned construction businesses, and since they “were born with a smartphone in their hands,” he decided to “help them build something that puts their business on the rails.”
Knowify takes care of the administrative part of the business for construction companies. Visent explains that “we’ve been building stuff the same way for 5,000 years. There’s a job site and a project manager with a piece of paper telling people what to do.”
And yet the construction industry today is “super complex and particularly susceptible to cash flow swings,” he says. Construction businesses often have a hard time managing cash. There are issues with the timing of being paid by clients vs. having to pay bills and employees. It’s hard, Visent explains, for construction businesses to match cash in and cash out. In fact, he claims that 50% of construction businesses will go out of business in five years.
That’s why Visent is excited about the partnership with Fundbox: “It’s an easier way for businesses to get cash and help fix their temporary [cash flow] issues. They need a flexible solution, and Fundbox is more appealing than going to the bank.”
Embedding the app in Knowify is a win-win. The constructions business owners know and trust Knowify, and the option to get financing is there if they need it. “It’s a seamless experience, but we don’t push it on them,” says Visent.
Building a beneficial ecosystem
Ryan Jackson, founder of Paid, another Fundbox Fuse launch partner, started his business over four years ago to help alleviate the back office administration that businesses need to deal with. For all businesses, it’s vital, he says, to “free up human capital to work on other things than payment reminders.” Jackson believes that for startups to succeed, they must identify the inflection point at which it makes sense to outsource AR. Instead of paying someone to send invoices, Jackson believes “businesses need to take their payments online and digitize the invoicing.”
As Paid grew, Jackson says, their customers started asking them for financial advice—about getting paid faster and online credit factoring options. “We get so many questions,” he says, “we needed to educate [our clients] about what their options are. And our clients welcome solutions.” Part of the problem, according to Jackson, is businesses today work in a global economy, where sometimes big enterprises are slow to pay.
Jackson started exploring, looking for a company “that was as tech forward as we are.” And today, being forward thinking is having solutions that live within other solutions. Paid tested Fundbox Fuse, their clients embraced it, and Jackson considers it a “win-win partnership.”
Paid, Knowify, Fundbox and others are part of what Jackson calls the “Fintech family. We all know one another. We all get asked a multitude of questions. And we’re building an ecosystem.” Smart small businesses will want to be part of that ecosystem. It will save you time and help you make money.
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Disclosure: Fundbox is a client of my company.
