SAN FRANCISCO, March 14, 2018 /PRNewswire/ -- Today Fundbox, the leading small business growth company, announced the launch of Fundbox Pay, a new payment and credit solution servicing the $4.5 trillion small business-to-business (SMB2B) transactional market in the U.S. By addressing SMB's lack of credit access and by facilitating credit payments between buyers and sellers, Fundbox Pay provides the 21st-century infrastructure to unlock the trapped value in the SMB2B economy.
Antiquated Credit Infrastructure Trapping Value for SMBs
Since the 1950's and 60's, the emergence of credit cards – backed by issuers and supported by credit networks – has done away with the antiquated concept of consumers carrying "tabs." This infrastructure removed the friction from consumer commerce, however, the SMB2B economy still carries the unnecessary strains of pre-credit card commerce.
B2C credit proliferated due to standardized consumer underwriting with FICO scores. Yet there is no unified underwriting standard for small businesses, and relying solely on FICO has proven to be a poor predictor of a business's creditworthiness. As a result, SMBs lack sufficient access to credit – 60 percent face a financing shortfall – so they still carry "tabs" with one another like consumers did before credit cards.
Credit is still necessary for SMB2B commerce – whether banks are willing to lend to SMBs or not – which is why SMB sellers allow buyers to take their time paying for goods and services. A Harvard Business School case study estimates that sellers carry an average of 3x their annual income in accounts receivable, meaning that they are working for three years to fund their customers' credit. U.S. small businesses hold an estimated $1.2 trillion in receivables, which could be unlocked into the economy if the credit and network infrastructure from B2C existed for SMB2B.
Fundbox Pay to Democratize Access to Credit
Fundbox Pay provides a two-sided solution so that businesses no longer have to extend each other credit and wait on payments. With this product, buyers can make purchases with Fundbox Credit™ and sellers get paid right away less a processing fee. Moreover, buyers get up to 60 days with no interest on their purchases and can choose to extend their terms for a fee. Fundbox Pay builds on the company's fundamentally unique approach to small business underwriting after five years of AI investments. Fundbox's approach dismantles traditional credit barriers like FICO requirements and manual underwriting costs, finally empowering small businesses to break free from cash-flow gaps and seize growth opportunities.
"Fundbox Pay was designed to be the infrastructure for an already-existing economy that's been sorely underserved," said Prashant Fuloria, Chief Operations Officer at Fundbox. "Millions of small businesses provide free capital to other businesses on a daily basis. And yet no one has developed a credit and payment network that delivers the same radical convenience, flexibility, immediacy and overall value that consumer-facing SMBs have the benefit of using – until now. Our goal with Fundbox Pay is to become the point-of-sale platform for this SMB2B market and to make business transactions as simple as buying a cup of coffee."
"Small businesses serving other businesses--from small to large--have wanted the option to have their own credit/payment solution for some time now. This is a massive market opportunity, and it's surprising that no one has brought this sort of solution to market until now," said Laurie McCabe, Cofounder & Partner, SMB Group. "With their new Pay network, Fundbox has a perfect opportunity to become the POS for SMB2B transactions by filling a need that traditional or alternative lenders have yet to resolve."
"The Fundbox Pay solution creates opportunity for businesses like ours," said Lisa Fiore, Founder and CEO of LandscapeHub. "The Pay network allows us to provide more attractive terms to customers who don't have immediate access to credit."
Our mission at Fundbox is to simplify and improve the way that small businesses pay and get paid. The company uses cutting-edge technology, data science, and common sense to give small businesses greater access and choice to financial solutions that don't initially require a personal credit score. Fundbox provides credit limits up to $100,000 and can transfer funds as soon as the next business day. Because of us, small businesses across the U.S. have more control over their finances and are better able to succeed and grow.
Fundbox is funded by leading Silicon Valley entrepreneurs, finance veterans, and venture capitalists, including Spark Capital Growth, Bezos Expeditions (the personal investment arm of Jeff Bezos), General Catalyst Partners, Khosla Ventures, SV Angel, former CitiGroup CEO Vikram Pandit, and other prominent investors. Fundbox was recognized as a Billion Dollar-Startup to watch in 2017 by Forbes. For more information, please visit fundbox.com.
Tim Donovan, Corporate Communications
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