Editor’s note: NerdWallet’s Step by Step series gives small-business owners a behind-the-scenes look at the loan application processes of various online lenders. We show you what you can expect, screen by screen, as you submit your application.
U npaid invoices can be a drag on your small business, especially when they start piling up. BlueVine offers a way to access that capital by advancing you a big portion of payments you’re expecting from customers.
This type of financing, known as invoice factoring or accounts receivable financing, is more expensive than a bank loan or other kinds of online business loans. But for small businesses that deal regularly with piles of unpaid invoices, it’s a good way to plug short-term cash flow gaps.
BlueVine also offers a line of credit, which gives you access to money to draw on as needed.
You can read more about BlueVine in our review.
The application process can be complicated, even for small-business owners familiar with factoring. Let’s go through the steps.
Table of Contents
BlueVine loan application: Summary
Time: Creating an account takes just minutes. If approved, you could get funded in a day. For BlueVine’s line of credit, the approval process could take two to eight hours, and you could begin accessing the money in an hour once approved.
Documents needed: Bank account statements or electronic access to your bank account.
|BlueVine at a glance|
|Invoice factoring||Line of credit|
|Cost of funding||17% to 60% APR||16% to 62% APR|
|Loan amount||$20,000 to $2.5 million||$6,000 to $150,000|
|Loan terms||1 to 12 weeks||6 or 12 months|
Six-month line of credit:
12-month line of credit:
1. Signing up
It takes only a couple of minutes to set up a BlueVine account.
You’ll need to state the amount and type of financing you need: factoring or line of credit. (More on BlueVine’s line of credit below.)
In the next box, you’ll fill out a form with basic personal information, including your Social Security number.
2. Adding your bank and accounting system
You’ll then be asked to provide details of a bank account where you deposit payments, by check or automatic electronic delivery, from your customers. You’ll need to give BlueVine access to that account, either by providing the account details or uploading a recent statement.
Once you complete this step, a window will pop up to ask you for your invoicing software. The four choices you’ll see are QuickBooks online, FreshBooks, Xero and QuickBooks Desktop. If you use any of these, you can integrate your online account with BlueVine so you can easily transmit information on invoices for factoring.
Maybe you’d rather not integrate these accounts, or you use a system not supported by BlueVine. Or maybe you don’t use invoicing software. No worries, the lender says. You can create your own invoices to submit through the site.
Once you’ve filled out the first two boxes, you’ll have a basic BlueVine profile.
3. Adding details to your BlueVine profile
BlueVine encourages you to add information such as your state of incorporation, your website and other company information, and even a profile picture. The more information you share with BlueVine, the greater your chances of getting a better deal, including a lower annual percentage rate, the company says.
Like other online small-business lenders, BlueVine uses online data — including private accounts that you share with the company and public ones, such as your company’s website — to evaluate your creditworthiness and the financial health of your business.
BlueVine will do a soft pull of your credit record as it evaluates your application. It will make a hard inquiry only after you accept a loan offer.
Expect a phone call from a BlueVine financing advisor within 24 hours of entering your information on the sign-up page. Once your account is approved, BlueVine will assign a “client success manager” to work with you.
Larry Eder, publishing director and owner of Fortius Media, a content and marketing services company, told NerdWallet about his experience applying at BlueVine. Eder says he didn’t have to wait long to hear from a BlueVine advisor. He got a call within two hours of setting up an account.
4. Getting a new bank account
Before you can submit invoices for factoring, you must change the way your customers pay you.
BlueVine will set up a bank account and a post office box for your BlueVine account, and you instruct your customers to send their payments to that account or PO box.
This is how you repay the cash advance. BlueVine will receive the payments from your customers. Then, after deducting the fees based on the agreed rate, it will wire you the balance of your invoice. More on this later.
Once you’ve set up the new payment system for your customers, you’re ready.
5. Getting cash for your unpaid invoice
When you click on the “Add an invoice” button, a box appears, asking you to type in the customer name, the amount on the unpaid invoice, the invoice number, date, due date and a description of the transaction.
If you’re using one of the accounting programs supported by BlueVine and you opt to integrate your accounts, you simply choose the customer and invoice you want to submit for factoring. You can also submit invoices manually.
You’d need to create profiles for your customers before submitting invoices.
For each approved invoice, BlueVine will advance you 85% to 95% of the total amount.
Let’s say you submit an unpaid invoice for $1,000 and BlueVine will advance 85%. BlueVine would send you $850 upfront. You should get the money via electronic deposit within a day or two. If you want to get it sooner, you could request a wire transfer and get it in a few hours, for a $15 fee.
The advance is paid back when your customers make their payments to the BlueVine bank account or the PO box BlueVine set up for you. BlueVine then deducts the fees for its service before sending the balance of the invoice to your bank account.
If you’re a new client, BlueVine will charge a weekly fee of 0.5% to 1% of the invoice amount. For existing clients with a good record, BlueVine reduces the fee to 0.3%.
With the $1,000 invoice example at 85%, you would get an $850 advance. If your weekly rate is 1%, and your customer pays the BlueVine account in four weeks, you’d pay $40 total. Once your customer pays the $1,000, BlueVine would deduct the $850 advance and the fee before sending you the remaining $110.
BlueVine won’t require you to submit a minimum number of invoices, unlike traditional factoring companies.
“In the old days, they took over everything,” says Eder of Fortius Media. “With these guys, you select. That’s the beauty of it.”
You could submit just one invoice one month, several more the next month and then not turn in anything after that. BlueVine wouldn’t penalize you or close your account. You’d only need to keep your bank account details up-to-date.
6. BlueVine and your customers
Unlike with traditional factoring, you’ll be responsible for making sure your customers pay you. If they pay by check or electronic deposit, the payments could be made in your name or to BlueVine. Some small-business owners prefer payments in their name to avoid confusing their customers.
In some cases, such as with larger invoices, your clients would be required to make payments directly to BlueVine. If your customers send the payments by wire transfer, they must be made to “BV Payments.” BlueVine offers a summary of these payment options on its site.
BlueVine will expect to get its money back by the due date you put down on the “new invoice” box. If your customer’s payment is late, BlueVine will give you an extra two weeks past the due date.
If your customer fails to pay, you’ll have to pay back the invoice. After two weeks past the due date, there’s a late fee of 3%, although a BlueVine representative says that can be waived if the balance is paid within a week.
You can keep track of your submitted invoices and other transactions on your account page.
7. Line of credit option
BlueVine’s invoice financing works mainly for small businesses that sell products or services to other businesses. If you’re a manufacturer supplying a major vendor or a catering or cleaning company that serves big customers, BlueVine is worth considering.
If your small business serves consumers or doesn’t produce many unpaid invoices, you could apply for a BlueVine line of credit. You’ll see that option as you’re setting up your account.
The company’s line of credit offers financing of $6,000 to $150,000, with fixed repayments for each draw over six or 12 months. Unlike BlueVine’s invoice financing, the line of credit is available to all kinds of small businesses, not just B2B firms. New borrowers can get approval and funding within 24 hours. The APR is 16% to 62%, compared with BlueVine’s invoice factoring rates of 17% to 60%.
For BlueVine’s six-month line of credit, you’ll need to have been in business at least six months and have annual revenue of at least $120,000 and a FICO score of at least 600. Minimum requirements for the 12-month line of credit are more stringent: at least a 650 personal credit score, two years in business and $500,000 in annual revenue. As with BlueVine’s invoice factoring option, you’ll need to provide access to your bank account or submit three months of bank statements.
Once approved, you can draw on your credit line as needed. Your available credit is replenished as you repay outstanding funds.
8. Invoice factoring isn’t for everyone
There are other reasons invoice factoring may not work for your small business.
One is the strength of your business. If you have a steady and robust revenue stream, BlueVine invoice factoring can help you plug cash flow gaps. But if your revenue flows are weak or inconsistent, it could eat into your profits.
“If you have a strong business, factoring can help you,” says Ed Castaño, a company spokesman, told NerdWallet in a 2015 interview. “If it’s weak, it can put your business in a downward spiral.”
Another important consideration is whether your customers are reliable. “The key is having good clients,” Eder says. “If you have good clients, BlueVine is a nice option for you. … The fees may be a little bit more, but the big thing is it’s easy to manage.”
For that, Eder says, he’s willing to pay a little more.
If BlueVine sounds like the right fit, apply on the lender’s secure site:
Find and compare small-business loans
If BlueVine isn’t right for you, consider other small-business loans using NerdWallet’s comparison tool. We gauged lender trustworthiness and user experience, among other factors, and arranged the lenders by categories that include your revenue and how long you’ve been in business.
NerdWallet writer Andrew L. Wang contributed to this report.
Updated Nov. 21, 2017.
To get more information about funding options and compare them for your small business, visit NerdWallet’s small-business loans page.