Forward Financing Review
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- Date Established
- Boston, MA
- Excellent public reputation
- Relaxed credit score requirements
- Transparent terms and fees
- Fast time to funding
- High factor rates
- Expensive terms and fees
Forward Financing is a Boston-based funder that specializes in providing small businesses with capital on short notice, emphasizing technology, transparency, integrity, and speed. It’s one of a growing industry of online funders that uses high-interest financial products to circumvent some of the existing barriers to lending to companies with poor credit.
Forward shares many of the virtues and vices of its competitors, offering diligent customer service and impressive speed, albeit it at a high cost. We’ll try to fill in some of the blanks for you below.
Note: You should approach the world of alternative funding with caution; the rates are often usurious and the terms can be punishing for the unprepared or unlucky. You should always make sure you’ve exhausted other potential sources of funding first (take a look at our handy short-term funding comparison chart to make sure).
Table of Contents
Forward Financing offers the following types of business funding:
Here are the borrower qualifications for Forward Financing:
|Time in business:||3 months|
|Revenue:||$5,000 per month in sales|
Terms & Fees
Here’s what you can expect:
|Borrowing amount:||$5,000 – $300,000|
|Term length:||4 – 12 months|
|Fixed fee:||x1.3 – x1.5|
|Origination fee:||$300 – $3,000 processing fee|
|Effective APR:||Learn more|
|Collateral:||UCC-lien or none|
Forward, like most online funders, uses revenue-based models when deciding who they’re going to offer capital to. Their financial products take the form of cash flow loans (concerned with the average balance of your business account) and merchant cash advances (based on your average daily credit/debit card sales). The latter generally aren’t dependant on credit scores and, therefore, are easier to qualify for.
In either case, you should expect to pay a pretty high premium for what you borrow. Rather than charging interest, companies like Forward charge a fixed fee. This amount is assessed by applying a multiplier (called a factor rate) to the amount you borrow. So, if you borrow $10,000 at a 1.3 factor rate, you’ll owe $13,000 ($10,000 x 1.3). It’s a simple system, but one that tends to mask high costs. When you convert fixed fees to APRs, it’s not unusual to see the equivalent of triple-digit interest rates. You should also factor in service fees, which are usually deducted from the amount of money you receive from the funder.
If you are approved, you’ll be making an automated payment each business day until the borrowed amount plus fee is paid off. In the case of a short-term loan, the payment will be debited from your business bank account. If you received an MCA, however, an agreed-upon percentage of your daily credit/debit card sales will be “held back.” In this way, MCA term lengths are less set in stone than the term lengths of short-term loans.
Forward Financing only charges one additional fee: an upfront processing fee. This fee is tiered and depends on the amount you borrow–the bigger the loan or advance, the bigger the fee–but it isn’t a direct percentage of the amount you borrow. It can range from $300 to $3,000.
Forward Financing reserves to right to file a UCC-lien on customers, though it’s a practice the company says they take only when necessary.
There’s no penalty for paying off your balance early, and in some cases you may even receive a discount, but this appears to be determined on a case-by-case basis.
Forward claims to have a 10-minute application process. Provided you have all the relevant information handy, that’s not an unreasonable estimate.
You can begin the process online, where you can fill out an application and upload bank statements for proof of income. If you provide all of the information needed, you’ll soon be offered one or more funding options to select from. Choose the one you like and that’s it! If the stars completely align, you should be able to get same-day funding.
Sales & Advertising Transparency
Forward Financing provides a limited amount of information on their website. You’ll find some information about the amount of money you can borrow, as well as some extremely basic tidbits about qualifications and term lengths. Forward doesn’t tell you much about what its products are or how you’ll be paying them back.
The company is pretty forthcoming about terms and fees if you actually talk to representatives, however.
Customer Service & Technical Support
Customer reviews speak positively about contact with Forward’s staff. I had a hard time reaching a knowledgeable staff member when I called–you’ll most likely be asked to leave your information so a specialist can call you back later–but I received a phone call back within an hour.
Despite the company’s high rates, Forward Financing clients generally seem to be satisfied with the experience. Forward is accredited with the BBB and has maintained an A+ rating on the watchdog site. Additionally, most of the user reviews there are positive. User reviews on TrustPilot are also overwhelmingly positive, with the company rating a 9.5/10.
Negative Reviews & Complaints
General criticisms of this type of product include:
- Cost: While it comes with certain conveniences, this isn’t a cheap way to finance your business, especially after fees.
- Availability Of Products Varies: State laws govern whether certain types of loans can be offered, particularly at high-interest rates.
- Lack Of Transparency: While Forward Financing is a little more transparent than most funders, there are a few glaring holes in what they disclose upfront, particularly where fees are concerned.
Positive Reviews & Testimonials
Customers liked Forward Financing’s:
- Customer Service: Most positive reviews mention strong customer service.
- Speed: Customers seemed satisfied with the speed at which they received their capital.
- Ease Of The Process: Forward customers frequently expressed satisfaction with the minimal amount of legwork they had to do at each stage of the process, many praising the simple application process.
Forward Financing has a hard time standing out in a crowded field. Ideally, their niche would be businesses with poor credit who need fast, short-term funding. You expect any business catering to a sub-prime market to have high rates, but Forward’s combination of high factor rates and high administration fees make it a pretty expensive way to fund your business.
That said, if you aren’t dissuaded by the high rates, Forward does seem like a trustworthy company with strong customer service. It’s just a question of whether you can do better than what they’re offering.
If you’re not sure what direction to take, check out our alternative suggestions page for some ideas. Meanwhile, if you’ve had a good or bad experience with Forward Financing, we’d love to hear about it.
Business Loan Rating Criteria.