Types of loans
Small businesses requiring a quick infusion of funds without the need to meet stringent qualification requirements and those preferring flexibility in funding and repayment options may benefit from a FORA Financial loan.
Founded in 2008 in New York City as Paramount Merchant Financing, FORA Financial aims to "foster and support the small business industry" by providing personalized funding solutions to diverse types of merchants. With its offerings of short-term working capital loans and merchant cash advances, FORA Financial works within the changing financial market to bring the most relevant form of funding to each applicant. To date, the lender has provided over $850 million to more than 15,000 customers across industries.
Flexibility in " requirements, amounts and terms " sets FORA apart from traditional lenders and makes it possible for merchants in many different financial situations to obtain the funding they need to grow their businesses. Even industries with cash flows subject to seasonal fluctuations, such as construction and retail, can find funding solutions tailored to their unique circumstances.
Working capital loans provide funding in amounts ranging from $5,000 to $500,000 with approval in less than 24 hours and delivery of cash in 72 hours. Businesses can use the money to:
Other business-related uses of the funding, including paying back taxes or liens and paying off a judgment are also allowed so that FORA's customers have the freedom to apply loans wherever money is needed most. With terms up to 18 months, no need for collateral and the ability to earn prepayment discounts, loans from FORA Financial offer the flexibility small businesses require to succeed.
For companies making most of their income from credit card sales, FORA's merchant cash advances provide a lump sum advance paid back using a percentage of daily credit card transactions. These advances have no set terms and are available in the same amounts as working capital loans. Whether a company needs quick cash to replenish inventory or is ready to upgrade to the latest technology, a merchant cash advance may be the right financial tool.
Like most alternative business lenders, FORA Financial sets a minimum personal credit score requirement for merchants applying for loans. However, although the lender prefers applicants to have a FICO score of 600 or more, a lower score doesn't lead to automatic disqualification. The overall financial health of a business is more important to FORA than any single number, making it possible for businesses with poor credit but positive payment and cash flow histories to get the funding they need.
Still, FORA requires at least 6 months’ time in business and a maximum of four negative ending days per month in a business’ bank account.
FORA performs a soft pull credit check during the preapproval process, so anyone can check to see if their business qualifies without any negative effects on credit score. However, it's important to note the hard pull required to determine loan terms after a full application has been received may have a small impact on an applicant's total score.
Short-term loans, including those offered by FORA Financial, are often paid back in daily installments deducted via ACH from your business checking account, or as a percentage of the merchant's daily credit card transactions. However, FORA also offers the option of weekly payments to simplify budgeting and make loans more accessible to businesses unable to meet a daily obligation. Weekly payments are a boon to the working capital loan industry because many merchants feel turned off by the intrusive daily payment ACH withdrawls, making the weekly payment option far more appealing.
FORA also differs from many fast cash lenders in that they grant prepayment discounts to customers able to pay off loans before the end of the proposed terms. If a customer needs to renew, retention pricing makes this option cheaper than it may be with other lenders.
Lenders usually avoid extending funding to high-risk industries, but FORA Financial will consider working with some companies with fluctuating or unpredictable cash flows. Restaurants are listed among FORA’s serviced industries, but qualifying for a loan may necessitate meeting a stricter set of requirements. The same is true for retail companies in need of fast approval for working capital.
FORA will not grant loans to the following business types:
FORA Financial's website emphasizes the company's dedication to providing funding to companies in a variety of industries. Some of these include industries to which traditional lenders are wary of extending loans, making FORA a viable option for merchants whose financial needs can't be met by local banks or credit unions.
FORA's full list of serviced industries includes:
However, they primarily focus on large trucking and construction deals.
Because FORA Financial aims to provide flexible loan structures and works with customers to create payment plans designed to support success, the company doesn't set term lengths in stone. Most merchants are given terms between 4 and 18 months.. Customers able to pay off a loan before the end of the term can save money with FORA's prepayment discount. Pre-paying a working capital speaks to the overall health of the business, as well as highlights the merchant's likelihood to pay back their next loan in a timely fashion. FORA, like their peers in the alternative lending industry prefer to work with customers that renew, which affords merchant with exceedingly better terms: longer amount of time to pay back the loan and lower rates.
Merchants wishing to request funding from FORA Financial begin the process with a quick pre-qualification application. After receiving the applicant's name, the business name, monthly gross sales volume, time in business and basic contact information, FORA usually responds with approval within 24 hours.
Applicants must provide the following details about their business to apply with FORA:
In addition to completing and signing and application, FORA Financial requires merchants to:
The person applying for the loan must also have at least 70 percent ownership of the company in order to qualify. No collateral or personal guarantee is required.
If funding is approved, the money is available within 72 business hours. This quick turnaround time is beneficial for companies dealing with short deadlines on growth opportunities or facing financial difficulties due to unexpected fluctuations in cash flow. Fast delivery of funds can mean the difference between carrying on and shutting down, and FORA Financial’s policy of considering multiple business factors when determining eligibility makes it possible for companies in shaky financial situations to receive funding.
As with the majority of short-term lenders, FORA uses an upfront factor rate instead of an interest rate spread out over the life of the loan. Factor rates are expressed as figures instead of percentages and indicate how much a merchant can expect to pay over and above the actual loan amount.
FORA Financial's factor rates range from 1.08 to 1.34. Multiplying the loan amount by the factor rate gives the total amount to be paid back. Instead of being calculated as percentage over time, factor rates are calculated once at the start of the loan and added to the principle. For example:
Taking the factor rate into account before entering into a loan agreement is essential, especially since it can add a significant amount to what a merchant owes. However, since FORA Financial also offers prepayment discounts, merchants that are careful with budgeting have the potential to minimize the expense associated with factor rates.
FORA Financial is primarily a first-position lender, meaning they prefer merchants to have no outstanding or concurrent loans at the time of application. In fact, the company advises against this practice, known as stacking, in a post on its blog, citing the potential financial pitfalls for businesses attempting to handle payments on multiple loans at the same time.
To maintain first-position status, FORA will pay off balances from competing loans as long as the merchant is able to net 50 percent of the proceeds for the financing requested. A second-position loan may be considered if a customer's deposit volume and daily ledger amounts show the payments can be supported.
However, FORA's view on stacking is largely negative, and the company encourages customers to obtain additional capital from a single lender rather than taking out separate loans. Frankly put, if a merchant has a working capital loan, but needs more money, they should go back to the original lender for funds. Searching for additional capital, or a stack, can expose the merchant to higher rates and shorter terms, potentially bankrupting the business.
No documentation or application processing fees are charged to merchants applying for loans from FORA. Working capital lenders that charge money upfront (before funding takes place) should always be avoided.
An origination fee is a percentage of the total loan amount charged at the time funding is granted. FORA Financial collects a 3 percent fee to cover costs associated with supplying the loan. Therefore, if a company qualifies for a $100,000 loan, $3,000 would be subtracted from the amount at the time of funding. Merchants seeking funding should consider the origination fee when budgeting for loan payments to ensure current cash flows are sufficient to support the required daily or weekly expenditure.
Customers may request a loan renewal as soon as at least 40 percent of the initial loan is paid off. Renewal requests require FORA to examine payment history, look over the merchant's last three months of business bank statements and ensure there has been no breach of the loan agreement. Remember, a stack is considered a breach of their loan contract. If a merchant stacks on their FORA loan, be prepared to explain why additional capital was sought out and why FORA couldn't meet that obligation.
If cash flow is favorable, payments have been made on time and customers aren't trying to stack loans, FORA is likely to grant a renewal. Improvements in credit score and other financial metrics may mean lower rates and a more favorable payment structure on the new balance.
Interest forgiveness isn't available on funding from FORA Financial because the company uses a factor rate and not an interest rate when determining fees for the life of the loan. This means any remaining fees from a previous loan must still be paid off if a customer requests additional funding or seeks to refinance.
However, FORA does offer prepayment discounts on their financial products, allowing customers to save money by paying back early regardless.
As long as the money is put toward business activities, FORA places no restrictions on the use of the funding it extends. Merchants are free to cover any type of expense from daily necessities to once-in-a-lifetime growth opportunities.
Customer ratings for FORA Financial range from average to excellent across major review sites. Yelp reviewers give the company 2.5 out of 5 stars, citing disappointment with the attitudes of staff members. Similar sentiments accompany the 3.8-star rating on Google. Other complaints include dissatisfaction with high interest rates and claims of FORA making it difficult for small businesses to pay off loans or qualify for refinancing.
Positive reviews, including 4.3 out of 5 starts on the Better Business Bureau (BBB) website and 9.4 out of 10 on TrustPilot, praise FORA Financial for quick delivery of funding, positive customer service experiences, helpful staff and providing financing to companies unable to obtain loans from traditional lenders.
On all review sites, FORA is responsive to customer complaints and inquiries, offering to contact reviewers to come to a resolution.
FORA Financial holds a California Finance Lender License and has been accredited by the BBB since 2011. The company has been recognized four years in a row by Inc.com as one of the 5,000 fastest-growing companies in the U.S. and "continues to remain a competitive leader " in fast cash loans.
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