Forward Financing is a Boston-based lending company that provides financing to small businesses nationwide. The fintech company uses a revenue-based financing model to fund businesses that might not qualify for traditional loans.
Many small businesses struggle to find funding when they’re younger or have low business credit scores. Forward Financing seeks to solve these challenges with an underwriting process that bases approval on a company’s revenue and cash flow.
They also offer some of the fastest turnaround times in the business finance sector. The application takes about ten minutes, and business owners typically get a response in a few hours. In some instances, customers receive same-day funding.
While the low approval requirements and fast funding are great, there are some drawbacks. Forward Financing fees and terms tend to be higher than industry standards.
Even so, the company is a viable financing solution for small businesses meeting the criteria. If you’re a business owner trying to decide if Forward Financing is right for your business, we can help guide you with answers to these questions:
Forward Financing, LLC is a fintech company that specializes in providing working capital to small businesses. The Boston-based company provides small business funding focused on easy application, low approval requirements, and fast funding.
Since launching in 2012, Forward Financing has helped more than 3,000 small businesses receive funding totaling over $150 million. They offer short-term financing in the form of merchant cash advances.
The company makes funding available for most companies across various industries as long as they meet the minimum requirements. Small business owners use Forward Financing funds to finance a wide range of business expenses.
When a business owner applies for small business finance with Forward Financing, the company looks at the business performance and cash flow to determine the best program to meet the business’s needs. The revenue-based model helps small businesses qualify even when traditional lenders won’t approve a financing request.
Revenue-based financing is when a company receives a lump sum of working capital in exchange for a percentage of future sales.
Once you apply, a dedicated account executive reaches out to you to discuss your financing options and business needs. While some custom financing options exist, Forward Financing has one main product.
A merchant cash advance (MCA) provides funding upfront, which is repaid from future revenue. The amount you borrow is typically based on your average monthly revenue.
Repayment for an MCA comes from a fixed percentage of future daily sales. That means if your daily revenue fluctuates, so does your payment. Low revenue days mean a lower payment, while high revenue days mean a higher payment.
Since the payments depend on your daily cash flow, the repayment terms are more flexible. Repayment terms on merchant cash advances can extend beyond the 12-month maximum term for the short-term financing product.
Forward Financing offers a lower qualification threshold than most traditional and online lenders. If small business clients meet these minimums, they should get approved.
One of Forward Financing’s most significant advantages is the low credit score requirement. Borrowers only need a minimum credit score of 500 for approval.
The revenue-based model means you must meet the minimum monthly revenue requirement of $10,000. When applying, you’ll include bank statements showing cash flow in your business account.
You can even have a negative bank account balance if it doesn’t exceed eight days within the month and the average balance works out to the monthly requirement. Most lenders will automatically decline financing requests when a bank statement shows a negative balance.
Forward Financing is also a good option for younger businesses as they only require one year of business history. Many lenders require a minimum of two years.
The rates run high compared to some competitors. They don’t have a traditional APR but instead charge a fixed fee, known as a factor rate, between 1.3-1.5.
For example, let’s say you borrow $50,000 with a factor rate of 1.3. $50,000 x 1.3 = $65,000, meaning you’d pay $15,000 to borrow $50,000. That’s an equivalent of a 51.45% APR on a 12-month term.
In addition, Forward Financing charges origination fees on their financing products. The origination fee schedule is as follows:
However, the factor rate and the origination fees are the only fees they charge. Forward Financing is upfront about their fees once you start the application process and speak to your dedicated account executive.
Borrowers also need to sign a personal guarantee, which applies to any business owner with a 20% or greater stake in the company. Forward Financing reserves the right to pursue a UCC lien if a borrower defaults. However, the company states they only pursue liens when absolutely necessary.
Make sure you review the financing agreement and all points to protect yourself. The company is mostly transparent about fees and terms, but you should always do what you can to protect yourself in any financing agreement.
Forward Financing’s application process is quick and easy. You’ll need to prepare some information ahead of time, but if you have everything on hand, you can complete the application in about ten minutes.
Before applying, you should gather the following information:
You can apply for Forward Financing through United Capital Source’s online application. So, before applying, a UCS executive will work with you to ensure that Forward Financing is the right product for your business.
Our one-page application requires basic information about you and your business. You’ll need to include bank account statements from the previous three months to create an account with Forward Financing.
Forward Financing does a soft credit inquiry, which does not affect your credit. Their underwriters mainly focus on your revenue and cash flow by examining daily deposits on your bank statements.
It only takes a few hours after applying to find out if you’re approved. If approved, a dedicated Account Executive will reach out to discuss your financing options and finalize the process. You’ll work with your account manager to finalize your loan proposal.
Once the underwriting process completes and you accept the terms, funding happens immediately. In some instances, you receive same-day funding.
Depending on your financing terms, payments usually begin seven days after you receive the money. The origination fee is deducted from the total funding amount. You then repay the financing in daily or weekly payments.
Business owners agree to repayment amounts and frequency in the financing agreement. Usually, you will connect your bank account to receive the funds and then set up automatic payments with the same account. Payments will auto deduct from your business account according to the agreed-upon schedule
With Forward Funding’s revenue-based models, it is possible to request payment relief when you’re having trouble. If you’re expecting a down period in revenue or even zero revenue for a time, you can email their Account Servicing team to arrange payment adjustments.
You can pay off the full amount early, but the total amount due doesn’t change. It might be possible to get a discount on early repayment in some instances, but restrictions apply. There are no additional fees or prepayment penalties for early payoff.
You can renew your financing agreement once you pay off 50% of the current debt owed. Forward Financing’s renewal team will discuss your options once you meet that threshold.
Forward Financing offers multiple benefits to small business owners needing immediate financing. The company’s most significant advantage is the fast turnaround time in getting funds. Sometimes, when everything aligns, borrowers receive funds the same business day they apply.
The fast funding time is a lifesaver for businesses in an emergency. In addition, many customers like the quick and easy application process. Forward Financing also does not run a hard credit pull, so it doesn’t affect your credit score when you apply.
Customers also get some flexibility with payments since the payment amount depends on revenue. When a borrower anticipates revenue shortfalls, there are also potential options for payment relief. However, adjusting payments is done on a case-by-case basis.
Another significant advantage is the ease of getting approved. Customers only need a credit score of 500, $10k in monthly revenue, and one year in business to qualify. For newer companies and those with low or no credit, Forward Financing offers approval when others can’t.
The company also has an excellent online reputation. Most customers state how their account executive helps with financing, explaining terms, and being available.
The biggest drawback is the high cost. With factor rates ranging between 1.3 to 1.5, customers could end up paying a lot for financing.
The short repayment periods also mean higher payments, which might present a struggle for some small businesses. Their revenue-based payment option helps relieve the high payments, but not all borrowers qualify for revenue-based repayment.
Another disadvantage is that the company doesn’t offer interest forgiveness on renewals. Users also can’t save money by paying off the loan early.
While the $10k per month revenue requirement is lower than some lenders, it still prevents some smaller businesses from qualifying. We’ve prepared a pro and con list for a quick summary.
Pros:
Cons:
Yes, Forward Financing is a legitimate and safe financial technology company. The company’s co-founders, Justin Bakes and John Cain founded the company in 2012, and Bakes serves as the Chief Executive Officer (CEO).
The company has a 4.9 out of 5 rating on Trust Pilot, with over 1,842 reviews. There are very few negative reviews, representing less than 1% of total reviews. Consumer Advocate rates them at 3.9 out of 5, which is considered very good.
One area where Forward Financing really stands out is its rating on Better Business Bureau (BBB). Currently, BBB rates them A+, and they respond to 100% of negative complaints.
Positive reviews praise the company’s customer service and the ease of getting money. With low approval requirements and fast funding, Forward Financing helps many small businesses access capital funding to grow their business.
Some specifics customers discuss are Forward Funding’s customer service, including the transparency of terms, the ability to speak to a live person and help with additional financing. Many users stated how their account executive worked with them to solve their specific financing challenges.
Negative reviews primarily center around the high fees and payment schedule. As we discussed, the factor rate runs high, especially when origination fees pile on top.
Other negative reviews discuss the lack of product availability. While Forward Financing services all 50 states, some states have restrictions on the types of financing available.
In addition, some customers complained of a lack of transparency in disclosing fees and terms. While the vast majority rate the customer service extremely high, some complain the service lacks honesty. However, after reading some reviews and the company’s response, the users might have failed to reach out to discuss payment relief options, causing a negative experience.
Forward Financing helps business owners with fair to poor credit. The minimum credit score requirement is 500, which is much lower than most lenders’ requirements.
Forward Financing bases its lending decision on your business’s revenue and cash flow more than traditional underwriting requirements. You should know that borrowers often have to sign a personal guarantee to get approved for business financing with bad credit.
Forward Financing doesn’t limit what you can use the funds for as long as it’s for a genuine business purpose. The company might ask how you intend to use the money, but they mostly use that information to identify the needs of businesses like yours better.
Some examples of how you can use the money include:
The fintech company provides financing to most industry segments, including high-risk industries like construction. However, they do not offer funding for specific sectors such as weapons manufacturing, adult entertainment, gambling, or illicit substances.
Forward Financing is one of the more accessible business financing programs to qualify for. However, there are some reasons the company might deny an applicant.
For starters, you need to meet their minimum revenue requirement of $10,000 per month. Also, you need at least one year in business.
Another possible reason you were denied is if you’re in an unsupported industry. While the company works with most industry segments, there are a few they won’t work with.
It’s also possible your state has some restrictions. While the company does provide funding in all 50 states, your state might restrict the specific financing product you requested.
There are many lending options if Forward Financing doesn’t work for you. There’s no shortage of lenders offering short-term business loans, merchant cash advances, or invoice financing. You can also find other revenue-based financing options.
Forward Financing’s unique funding process presents an attractive financial opportunity for certain small business owners. However, the cost of financing is a roadblock for some.
The fintech company is best for less established businesses with low credit scores that need urgent funding. The quick and easy application and fast turnaround time on approval and disbursement allow some borrowers to access the money on the same day they applied.
Traditional financing makes more sense for more established businesses with higher credit scores. While Forward Financing is a good company with an excellent reputation, you could save more on fees with a more conventional financing program. However, it might still be worth it if you need urgent funding.
At UCS, we know customers are generally satisfied with Forward Financing LLC. In fact, many continue with renewals for additional rounds of financing. The company is highly rated on services like Trust Pilot and the Better Business Bureau. Based on customer feedback and financing products, we rate Forward Financing as 4.75 out of 5.
Disclaimer: The Forward Financing trademark is owned by Forward Financing LLC and its use herein is for reference purposes only and it does not indicate sponsorship or endorsement from Forward Financing LLC.
