Fora Financial Review

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Pros

• No credit score requirements
• Discounts for repaying early
• Suited for quick business financing
• The application process is fast and easy
• Customer service helpful

Cons

• Rates can be expensive
• Some additional fees charged
• Repayments are required frequently

Overview

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

Fora Financial is a pretty good benchmark for online lenders. It offers relatively fast funding in the form of short-term loans and merchant cash advances with relaxed credit qualifications. The funding isn’t cheap, but it’s not absurdly expensive either, with rates coming in at slightly under the median.

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. That said, Fora Financial offers some advantages that many of its competitors don’t, including early repayment incentives. It’s also fairly well trusted by former borrowers, with relatively few complaints.

If you don’t have access to less expensive capital, Fora Financial is worth including in your comparisons, as long as you’re sure your business can sustain the repayments. It’s a good lender to fall back on if your credit’s keeping you from getting a better deal. 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: A financial product wherein the funder purchases a percentage of your future daily credit card sales for a lump sum. The funder then “holds back” a percentage of your card-based sales each day until the terms of the advance are fulfilled.
• Short-Term Loans: A loan with a term length usually less than a year. Short-term loans use flat fees rather than interest rates and are repaid daily or weekly.

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 Financial does not advertise a minimum credit score requirement on its 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 its other guidelines. If you have been in business for less than six months or your monthly sales fall below the amounts listed above, your application will most likely get 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 Financial does not lend to businesses in the following industries:

• Accounting
• Adult entertainment
• Auto sales
• Financial institutions
• Gambling
• Lawyers
• Nonprofits

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 payments 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

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 with merchant cash advances, you’ll get 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 disbursed, you would not save money by repaying early. However, Fora Financial does offer a discount for repaying early, as low as $1.10 for every dollar still owed.

Application Process

Fora Financial has an expedited application process consisting of a one-page form. A representative will call for more information, which will include such tidbits as 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 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 Financial’s website.

Sales & Advertising Transparency

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

Otherwise, Fora Financial 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 Financial 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, the company has Twitter and Facebook accounts.

Many customers cite the company’s customer service as a high point of working with Fora Financial. 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.

User Reviews

Negative Reviews & Complaints

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

• Expensive Capital: Financing from Fora Financial is not cheap.
• Potentially High Origination Fee: Fora Financial charges between a 1% and 4% origination fee (before wiring your capital along to you, the company will 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 into completing an application after contact with Fora Financial.

Positive Reviews & Testimonials

As you might expect, Fora Financial has numerous testimonials on its 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 Financial in their comparisons; it works well as a fallback option.

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.

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