Forward Financing Review

Lender Overview

Loan types
Small business short-term loans and merchant cash advances (MCAs)
Loan amount
$300,000 maximum; $5,000 minimum
Loan buy rates
1.32 to 1.39
Origination fees
$300 for loans up to $10,000; $495 for loans up to $25,000; $795 for loans up to $50,000; $995 for loans up to $100,000; No document fees
Loan term
Fixed rate, self-amortizing loans with terms of between 4 months and 12 months
Loan availability
All 50 states
Funding time
10 minutes to apply; one hour approval; same day funding
Customer services
Contact by phone or email, Monday through Friday during regular business hours
Pros
  • Will accept as little as one year in business - most small business lenders require a minimum of two years in business.
  • Loan amounts to $300,000, compared with the industry average of about $150,000.
  • No collateral is required, other than future cash flow on merchant cash advances.
  • The low minimum FICO score requirement of 500 can accommodate owners with fair or even poor credit.
  • Very low upfront fees, with no document or application fees, and origination fees below $1,000.
  • Fast turnaround times - apply in minutes, approval in about an hour, and funding possible on the same day. This gives merchants the ability to move quickly as opportunities develop.
  • Forward Financing receives high ratings from third-party rating sources, including the Better Business Bureau. This is remarkable in an industry that has more than a few questionable competitors.
  • There's virtually no restriction on the use of loan proceeds.
Cons
  • No interest forgiveness on renewals.
  • Minimum loan buy rate of 1.32 is higher than industry standards.
  • The minimum monthly deposit level of $10,000 will exclude smaller businesses.
  • Maximum loan term of 12 months is shorter than the more typical 18 to 24 months available with most small business lenders.

About Forward Financing

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 Drill Down

Company Reputation

Forward Financing has the following ratings from third-party business rating services:

  • Better Business Bureau: A+ (on a scale of A+ to F), and has been accredited by BBB since December 3, 2013. BBB shows 24 positive reviews, and one negative one.
  • TrustPilot: 5 stars out of 5 (Excellent), and a score of 9.6 out of 10, on 267 reviews
  • Yelp: Forward Financing is listed on the site, but has no ratings
  • Glassdoor (employee reviews): 3.9 stars out of 5, based on 23 reviews
  • Consumer Advocate.org gives Forward Financing a score of 7.9 out of 10 (very good)
  • Customer comments & complaints: RipoffReport has no listing of complaints filed against Forward Financing
Licenses and Accreditations

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.

Forward Financing Borrower Requirements

To qualify for a short-term loan or merchant cash advance through Forward Financing you must meet the following requirements:

  • Be in business for at least one year
  • Provide at least three month's bank statements
  • Have a minimum personal credit score of 500
  • Have a minimum of $10,000 in deposits per month
  • Maximum eight negative ending days within the most recent month's bank statement

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.

Forward Financing Application Process

You'll need to have the following information available to make application:

  • Completed loan application, signed within 30 days
  • The name of each owner applying for the loan
  • Each owner's Social Security number
  • Business name
  • Business employer ID or tax ID
  • Most recent three month's business bank statements

Forward Financing applications for both short-term loans and merchant cash advances happen mostly online. It's a four step process as follows:

  1. "Let's Get Started" - in which you indicate the requested loan amount, your business start date, and confirmation that you are the business owner.
  2. "Business Information" - This page will ask you to supply the legal business name, any DBA that applies, type of business and federal tax ID, monthly revenue, business address and contact phone number, your industry and your company website.
  3. "Your Details" - Personal information for each owner of the business - name, date of birth, Social Security number, email address, phone number, and home address.
  4. "Financial Need" - in this screen you indicate what the funds will be used for, and upload copies of the four most recent bank statements.

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 Underwriting Considerations

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.

Forward Financing Small Business Term Loans and Merchant Cash Advances

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:

  • Debt refinancing
  • Business expansion
  • Inventory purchase
  • Equipment purchase
  • Marketing
  • Miscellaneous business expenses
  • Payment of taxes
  • Working capital
  • Other 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:

  • Loans up to $10,000, $300
  • Loans up to $25,000, $495
  • Loans up to $50,000, $795
  • Loans up to $100,000, $995

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:

  • No landlord reference is required
  • Will consider funding merchants with a current negative balance in their bank account, which will result in a decline with other small business lenders

Short-term Loans vs. Merchant Cash Advances

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.

Who Forward Financing Short-Term Loans and Merchant Cash Advances Work Best For

We've identified five types of merchants for whom Forward Financing can be a preferred loan source:

  1. Relatively young businesses. Forward Financing requires merchants to be in business for at least one year. In the small business space, a more typical requirement is a minimum of two years.
  2. Businesses where the owners have fair or poor credit. Because Forward Financing lends primarily on the cash flow of a business, individual credit strength is much less of a factor than it is with other lenders. The minimum FICO score requirement of 500 will accommodate most credit levels. Forward Financing will even accept businesses that have current negative bank account balances, as long as the cash flow supports the loan amount requested.
  3. Merchants who need larger loan amounts. Most small business lenders will go no higher than $150,000 or $200,000. Forward Financing will go as high as $300,000, giving merchants many more options to manage and grow their businesses.
  4. Merchants with nonstandard loan proceeds requirements. Some small business lenders restrict the purpose of loan funds. For example, they may not permit the funds to be used for payment of taxes or payroll. Forward Financing has no hard limits on the use of loan proceeds, as long as they are used for business purposes.
  5. Merchants who are looking for maximum net loan proceeds. More typical with small business lenders are origination fees that can run anywhere from 2% of the loan amount, up to 5%. Forward Financing has very low origination fees, ranging from a low of $300 to a maximum of $995. This is considerably lower than a typical small business lender, who might charge 3% - $3,000 - on a $100,000 loan. As well, Forward Financing doesn't charge application or document fees. Lower fees mean more money in your pocket.
Kevin Mercadante
About Kevin Mercadante
Since 2009, Kevin Mercadante has been sharing his journey from a washed-up mortgage loan officer emerging from the Financial Meltdown as a contract/self-employed “slash worker” – accountant/blogger/freelance blog writer – on Out of Your Rut.com. He offers career strategies, from dealing with under-employment to transitioning into self-employment, and provides “Alt-retirement strategies” for the vast majority who won’t retire to the beach as millionaires. He also frequently discusses the big-picture trends that are putting the squeeze on the bottom 90%, offering work-arounds and expense cutting tips to help readers carve out more money to save in their budgets – a.k.a., breaking the “savings barrier” and transitioning from debtor to saver. He’s a regular contributor/staff writer for as many as a dozen financial blogs and websites."

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