Fora Financial Review

Pros

• Excellent customer service
• Relaxed loan qualifications

Cons

• Potentially high origination fee
• Moderate factor rates

Overview

Fora Financial is an alternative small business lender based in New York City. Founded by two college roommates, Fora Financial (previously known as Paramount Merchant Funding) is a merchant cash advance and short-term loan provider.

Fora boasts all the characteristics common in the merchant cash advance/online loan industry. Qualification is easy, the time from application to funding is fast, and repayment is automated.

Convenience always comes at a cost, though. You can expect to repay a fee costing between 1.1 – 1.3 times the amount of capital extended to you. In other words, for every dollar you borrow, you’ll have to pay between $0.10 and $0.30 in fees.

If you don’t have access to less expensive capital, Fora is worth including in your comparisons, as long as you’re sure your business can sustain repayments. Read on for the low-down, or check out our favorite alternatives to merchant cash advances.

Services Offered

Fora Financial offers the following products:

• Merchant cash advances
• Short term loans

Borrower Qualifications

These are the qualifications for getting a merchant cash advance from Fora Financial:

And these are the borrower requirements for getting a short term-loan from Fora Financial:

Fora does not advertise a minimum credit score requirement on their website. This company does do a hard credit check on your personal score to help determine your terms, but a poor score alone will not stop you from accessing capital.

However, Fora Financial is strict about their other guidelines. If you have been in business less than six months or your monthly sales fall below the amounts listed above, your application will most likely be rejected. If you’re trying to qualify for a merchant cash advance, remember that the $5K/monthly revenue minimum must be in credit or debit card sales.

Additionally, Fora does not lend to businesses in the following industries:

• Accounting
• Adult entertainment
• Auto sales
• Financial institutions
• Gambling
• Lawyers
• Non-profits

Finally, your business cannot be in open bankruptcy or have closed a bankruptcy case within the last year.

Terms & Fees

These are the rates and fees for Fora Financial’s products:

Merchant Cash Advances

Merchant cash advances, which are technically purchases of a percentage of your future card-based sales and not loans, are repaid through a daily deduction of a percentage of your card sales (which are usually variable), so there is no true term length.

Instead of charging interest, Fora Financial charges a one-time factor rate (sometimes called a “buy rate” or “flat fee”). To understand how much you’re paying, multiply the rate by the principal. For example, if you’re borrowing $50K and you have a factor rate of 1.2 (or 20%, as it’s often written), you’ll have to repay $60K: $50,000 x 1.2 = $60,000. In most cases, you’ll be making daily payments. In the case of advances, these will be a percentage of your card-based sales for the day.

Despite the fact that the factor rate is often communicated as a percentage, it’s not the same as APR. In general, the shorter your term length, the higher your APR — even if you’re still repaying $0.20 in fees for every dollar borrowed.

Short-Term Loans

Here are the rates and fees for Fora Financial’s short-term loans:

Short-term loans, unlike MCAs, are technically loans; however, their terms are different than what you might be used to with traditional installment loans.

Like merchant cash advances, you’ll be charged a flat fee rather than a traditional interest rate. You’ll also be making regular payments, typically daily, until your loan is paid off. In this case, however, these will be flat payments deducted from a business account rather than a percentage of your daily sales.

Normally with this type of loan, because the fee is only calculated when the loan is dispersed, you could not save money by repaying early. However, Fora does offer a discount for repaying early, as low as $1.10 for every dollar still owed.

Application Process

Fora has an expedited application process consisting of a one-page form. A representative will call for more information, which will include tidbits like monthly sales, how long you’ve been in business, and pertinent contact information. They’ll also answer any questions you might have. At this point, they’ll do a soft pull on your personal credit and provide you with an estimated quote detailing your potential fees, options, and term lengths.

If you wish to continue on the process, they’ll send your application through underwriting to verify and finalize all your information. If everything checks out, you’ll be officially approved, and the money will be wired into your bank account. Final approval can arrive within 24 hours, with funds landing in your account as soon as 72 hours later.

The stated time from application to funding is usually about four days, according to Fora’s website.

Sales & Advertising Transparency

Fora is about average in this category. I appreciate that the website has videos to explain how the loans works, payback and all. That said, their approach to disclosure is starting to look a bit dated compared to some of their most serious competitors.

Otherwise, Fora doesn’t provide a whole lot of solid information. You won’t find any information regarding fees or collateral, or any way at all to compare Fora to other financing services.

Customer Service & Technical Support

Fora Financial is available by phone or email. Or if you’re into the whole social media thing, they have Twitter and Facebook accounts.

Many customers cite the customer service as a high point of working with Fora. Reviewers claim that the company is honest, transparent, easy to get a hold of, and not overbearing or trying too hard to make a sale.

Negative Reviews & Complaints

Fora Financial has a presence on Better Business Bureau website, where the company has an A+ rating and 11 complaints over the past three years. Additionally, there are a few reviews on Yelp and Google. Here’s what people don’t like about their service:

• Expensive capital: Financing from Fora is not cheap.
• Potentially High Origination Fee: Fora charges between a 1% and 4% origination fee (before they wire your capital along to you, they’ll take a percentage cut of it). At the high end, this fee can be pretty punishing.
• Sales Pressure: A few customers complained that they felt railroaded to complete an application after contact with Fora.

Positive Reviews & Testimonials

As you might expect, Fora has a number of testimonials on their website. You can also find customer reviews on Yelp, Google, and Trustpilot. Customers are happiest with:

• Customer Service: Most customers posting positive reviews found Fora Financial’s customer service to be helpful and responsive.
• Fast Funding: Customers appreciated the speed and ease with which they received funding.
• Easy Qualifications: Customers with poor or little credit appreciated that the company was still willing to work with them.

Final Verdict

Fora Financial’s offerings are competitive with other funders that offer short-term financing. You might get a better deal here than with another alternative funder, or you might not. Your rates will depend entirely on the funder’s underwriting. Anybody who can’t get less expensive financing would benefit from including Fora in their comparisons.

Don’t make the mistake of thinking that a merchant cash advance is your only option, though. Many online lenders fund businesses that aren’t even close to being bankable. Check out our list of the best alternatives to merchant cash advances, and maybe you’ll find a less expensive option that will work for your business.