Forward Financing Review
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- Date Established
- 2012
- Location
- Boston, MA
Pros
- Excellent public reputation
- Relaxed credit score requirements
- Transparent terms and fees
- Fast time to funding
Cons
- High factor rates
- Expensive terms and fees
Overview
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
Services Offered
Forward Financing offers the following types of business funding:
Borrower Qualifications
Here are the borrower qualifications for Forward Financing:
| Time in business: | 3 months |
| Credit score: | 500 |
| Revenue: | $5,000 per month in sales |
For relaxed credit requirements, consider Lendio:
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.
Application Process
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.
Compare with Lendio:
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.
User Reviews
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.
Final Verdict
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.
Looking for an alternative? Consider Lendio:
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.
Check out these lenders:
Chris Motola
Finance Writer at Merchant Maverick
Chris Motola is a writer, programmer, game designer, and product of NY. These days he's mostly writing about financial products, but in a past life he wrote about health care and business. He's a graduate of the University of Central Florida.
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Read Next
Organization Name: Hanover
Most of these MCA Company’s hire people that have no idea about the Economy.. They Cold Call and have no idea about what they are talking about !! Promise Business owners anything just to say to there bosses they have a potential client !! Meanwhile just the owners make all the commissions on the deals and destroy a lot of companies!! Back in my day they would be hung out a window
They are all full of sh*t and only care about what commission they get and pay the workers pretty much nothing
This comment refers to an earlier version of this review and may be outdated.
Organization Name: Precision Paving & General Contracting, LLC
Exceptional Client Geared Company Our account manager is better than yours 😉 Ricardo J and the ENTIRE teamYou absolutely went above and beyond this morning. Like we discussed on the Phone owning a business is not for the faint of heart. We have had so many obstacles to overcome since receiving the loan -some of them have been with kind people and other obstacles – not so kind people-To the point that we didn’t even want to answer the phone. You are the example of someone who genuinely cares about their customer and not just their paycheck. You take pride in your job and are conducting business with integrity and high standards. I hope your company realizes what an asset you are and is proud to have you as a part of their family. Your approach with us – your client – is what we hope our foundation is based on. Rarely you will find businesses that share the same values and that is very unfortunate. Without the challenges that we are faced to overcome how could we ever truly appreciate what we have? Stay humble and stay kind!We want to thank you for connecting with us, truly understanding the issue and being willing to provide a solution. We wish you the best and look forward to having you as our account manager.
This comment refers to an earlier version of this review and may be outdated.
Organization Name: Xcellent Technology Solutions
Fundamentally dishonest and dishonorable company. Borrowing money from organized crime would be a better alternative. Forward financing rights contracts and then doesn’t live up to them. To get around usury laws forward financing sells “advances” of future sales. The APY on a loan I reviewed that the majority owner had accepted prior to my arrival works out to 163%. More than that in order to make this legal forward financing puts in a clause that in the event of a business downturn they will renegotiate the offer …don’t expect them to honor this clause. Their reputation is poor even among other subprime lenders. After litigation they even balked at living up to the legally appointed terms of the settlement. We had to have our lawyer compel them to honor the agreement they had signed just a few months later. The mob’s 2 points a week is actually better and if you absolutely must borrow subprime borrow from a number of similar companies who are actually reasonable business people.
This comment refers to an earlier version of this review and may be outdated.