Forward Financing is a fintech company focused on helping and empowering small business clients. Founded in 2012, and based in Boston, Massachusetts, Forward Financing has more than 50 employees, providing more than $150 million in funding for over 3,000 small business customers.
The company offers short-term business loans and merchant cash advances to small businesses, with funding occurring often on the same business day. Merchants can get funding of up to $300,000, with minimal documentation, and the entire application process taking place online.
Each merchant gets a dedicated advisor to help them navigate the process. Custom financing packages are available, and there is virtually unlimited use of loan proceeds. The company provides financing for most types of businesses, as long as they meet Forward Financing's income and credit guidelines.
Forward Financing was started by cofounders Justin Bakes and John Cain. Justin serves as chief executive officer. Before starting the company, he spent many years advising multibillion-dollar corporations on mergers and acquisitions and capital raises. But he saw the greatest opportunity and serving small businesses. His background includes stints with Salomon Smith Barney, UBS Investment Bank, and Watsco, Inc.
John Cain's previous experience includes many years in investment banking, corporate financing and consulting. He held previous positions with Rothschild, XRoads Solutions Group and Burger King Corporation. He serves at Forward Financing in the role of Chief Operating Officer, overseeing underwriting, customer service, technology and strategic partnerships.
Forward Financing is well regarded among the third-party rating services, including the Better Business Bureau and Trust Pilot.
Forward Financing has the following ratings from third-party business rating services:
The company is based in Massachusetts, but it is not registered with the Massachusetts Secretary of State.
For 2017 Inc.com ranked Forward Financing #15 on its Inc. 5000 list for 2017.
To qualify for a short-term loan or merchant cash advance through Forward Financing you must meet the following requirements:
No application fee is required, and Forward Financing does not charge a document fee. Origination fees are determined on a sliding scale based on the loan amount, and are detailed below.
You'll need to have the following information available to make application:
Forward Financing applications for both short-term loans and merchant cash advances happen mostly online. It's a four step process as follows:
Once you complete that information, you hit the APPLY NOW button, and your application will be in process.
If you have all of your information ready, the application can be completed in as few as 10 minutes. Approval will then take about one hour. If your loan is approved, and you accept the offer, you can get funding as early as the same day.
Once your loan is approved, you can review the amount and terms offered, and evaluate your options. You can select the best option for you, and if you approve the offer, you can receive the funds on the very same day.
Forward Financing uses revenue-based models in making loan determinations. They're more concerned with cash flow, particularly the average balance in your business account, or your average daily credit and debit card sales. Traditional underwriting criteria, particularly credit scores, are less of a factor.
For that reason, Forward Financing is more accommodating on credit issues than most other small business lenders. For example, they will accept a minimum FICO score of 500 for owner/applicants. Most other small business lenders require a minimum score of 600, or even 650. Forward Financing will even consider merchants who currently have a negative balance in their business bank account. Most small business lenders will reject such an applicant immediately.
Loan purpose. Loans must be business related, but they can be used for just about any purpose.
Typical Forward Financing loan proceeds may be used for any of the following purposes:
Industries funded. Most industries are eligible for financing, but Forward Financing specifically targets restaurants, manufacturing companies, and retail operations.
Cautionary Industries. Forward Financing prefers not to lend to financial services companies, real estate related businesses, janitorial services and cell phone companies.
Buy rates. 1.32 to 1.39 - If you borrow $100,000, and the buy rate is 1.35, you'll be required to repay $135,000 ($100,000 X 1.35). That does not include the origination fee.
Origination and document fees. There is no document fee, and origination fees are based on loan size, and are as follows:
Loan term. Four to 12 months on short-term loans. Merchant cash advances are repaid by a percentage of daily business deposits, and do not have a specified long-term.
Collateral required. No collateral is required for short-term loans, but personal guarantees from each owner on the application are required. Merchant cash advances require the sale of future revenue to satisfy the loan.
Repayment frequency. On short-term loans, payments are made automatically each weekday. The predetermined amount is debited from the business bank account. Repayment uses simple automated ACH deductions from the business checking account.
On merchant cash advances, repayment is determined by a percentage of daily deposits collected until the advance is fully repaid. Repayment also takes place by use of automated ACH deductions from the business checking account.
Stacking. Forward Financing can be as low as the fourth position.
Loan Renewal Policy. Forward Financing will consider a renewal as soon as at least 50% of the original loan balance has been paid.
Interest forgiveness. Not available.
Exceptions. Forward Financing will consider the following exceptions:
Which loan type is best for a merchant, a short-term loan or a merchant cash advance?
A short-term loan may work better for a business with a predictable cash flow, and a better ability to meet a fixed daily payment. It's also best for a business with a short-term need, such as launching a marketing campaign. Since the time of the loan will be one year or less, it will be repaid quickly.
Merchant Cash Advances will work better for merchants who may have difficulty with fixed daily payments. Merchant cash advantages are based on a fixed percentage of gross sales, then collected daily. That means that the actual amount of the payment will change each day, based on that day's cash flow. On slower days, the payment will be lower; on higher revenue days, the payment will be higher. That means the payment will fit nicely within whatever the cash flow is for each day.
Like term loans, merchant cash advances can be used for any purpose. But they might work better for longer-term purchases, since the advances have no set term.
We've identified five types of merchants for whom Forward Financing can be a preferred loan source: