Fundbox Announces Venmo-Like Small Business Payment Platform

Fintech startup Fundbox launched Wednesday a Venmo-like payment platform for small businesses. Fundbox Pay is meant to facilitate an estimated $5 trillion to $10 trillion in small-B2B commerce.

“Our goal is to make transactions between SMB's serving other SMB's as simple and fast as buying a cup of coffee,” Tim Donovan, head of Fundbox communications, said in an email. “Think Square, Paypal or Amazon…but for SMB2B. Our platform is designed to be the infrastructure for SMB2B commerce in the 21st Century.”

The platform expands on Fundbox’s current product that streamlines credit access.

How It Works

Financial institutions treat small businesses like consumers by requesting owners’ credit history, pulling FICO reports and using that data to extend business credit. But Fundbox considers this approach insufficient.

“A small business is not a consumer but it’s also not an enterprise,” COO Prashant Fuloria told Benzinga. “It’s somewhere in between. However, traditional approaches to credit and we argue payments as well only really support enterprises and consumers relatively well.”

So the five-year-old company issues credit based on business metrics. Small businesses can integrate their bank accounts or accounting and invoicing software to the Fundbox platform, and the creditor evaluates fundamental business health.

Its latest innovation allows companies to send invoices to fellow registrants and, for a fee, receive an immediate payment from Fundbox.

“We want to do for SMB2B commerce what the credit card infrastructure has done for B2C,” Fuloria said.

To check out companies like Fundbox for yourself, grab a ticket to the Benzinga Global Fintech Awards May 15-16 in New York.

Why It’s Important

By Fundbox’s assessment, cash flow gaps are the No. 1 cause of small-business failures. A seller front-loads expenses to deliver a product and then back-loads incoming cash as it waits on payments.

“What’s happening is that small businesses or sellers are acting like banks even though they don’t want to,” Fuloria said. “They’re stuck providing credit, called trade credit, to their buyers while not being equipped to do that well. It’s not their focus. They’re not in the business of being a bank, they’re in the business of distributing food or constructing a house or what have you.”

Fundbox Pay ensures the seller is paid immediately while the buyer gets a 60-day interest-free credit term with an extended payment plan.

"The Fundbox Pay solution creates opportunity for start-up businesses like ours," Lisa Fiore, founder and CEO of LandscapeHub, told Benzinga after testing the platform. "The Pay network allows us to provide more attractive terms to our customers who do not have immediate access to credit."

The Scope Of Influence

One analyst sees vast potential for the product in the SMB2B market.

“The prospects should be good,” Laurie McCabe, partner with SMB Group, said. “...I think there is a big opportunity because it kind of fits a gap that’s in the market. We’ve got credit cards that are very well accepted and established but are more in the B2C space, so the space for SMBs, especially SMBs transacting with other SMBs, still has a long way to go. There’s still a lot of financing issues and problems.”

Bill Haddad contributed reporting.

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