Fundbox announces new credit and payments solution

By addressing SMBs lack of credit access and by facilitating credit payments between buyers and sellers, Fundbox Pay provides the infrastructure to unlock the trapped value in the SMB2B economy.

Since the 1950s and 60s, 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 businesss creditworthiness. As a result, SMBs lack sufficient access to credit – 60%  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. US small businesses hold an estimated USD1.2 trillion in receivables, which could be unlocked into the economy if the credit and network infrastructure from B2C existed for SMB2B.

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 companys approach to small business underwriting after five years of AI investments. Fundboxs approach dismantles traditional credit barriers like FICO requirements and manual underwriting costs, finally helping small businesses to break free from cash flow gaps.