Forward Financing Review 2021: Confusing Cash Advances
Since our initial review, Forward Financing has updated its website with more information about its funding products and reached out to clarify some things. We’ve updated our review to reflect this new information (including giving Forward Financing’s overall rating a small bump).
Forward Financing offers small-business funding in the form of merchant cash advances. Like many online lenders, it promises a fast application and fast funding. As an added bonus, it has flexible borrower requirements and rave customer reviews.
That said, Forward Financing isn’t all sunshine and roses. It has some definite downsides (like the cost).
So should you get working capital from Forward Financing? We’ll explain the good, the bad, and the confusing to help you decide.
Forward Financing has reasonable MCAs (for what that’s worth)
Our biggest problem with Forward Financing is that it offers just merchant cash advances (MCAs)―one of the most expensive and confusing types of small-business financing out there.
Sure, Forward Financing calls its MCAs “revenue-based financing” (supposedly because that’s a more accurate and clear term, though we can’t help but notice it makes it harder for small-business owners to Google information about the product). But at the end of the day, they’re cash advances.
Given how expensive merchant cash advances are (in comparison to traditional term loans or lines of credit), we really don’t recommend them for most businesses. So you can see why Forward Financing’s choice to offer only MCAs doesn’t make it our favorite business lender.
Merchant cash advances (aka revenue-based financing) are not a type of loan (since they have fees instead of interest and don’t have set repayment terms). That said, we will use the word loan throughout this article for Google-ability and readability.
But if you’ve decided on getting a merchant cash advance, you can do worse than Forward Financing.
It has fairly low borrower requirements, making a Forward Financing advance easier to qualify for than many other kinds of business financing.
Forward Financing has a very low minimum credit score of just 500―so you can qualify even if you have bad credit. (That’s one of the few advantages of MCAs.)
And Forward Financing will fund businesses as young as one year old, which is on the low side of standard for online lenders. Its revenue requirement ($10,000 a month, or $120,000 a year) is also in line with what we’ve seen from other cash advances providers.
Qualifying for Forward Financing
Borrower requirements aside, Forward Financing stands out from other cash advance providers because of its excellent customer reviews. Seriously, Forward Financing has high customer ratings, even for an online lender.
So while we still don’t, as a rule, recommend merchant cash advances, Forward Financing isn’t the worst place to get one.
Still, before you apply, you need to make sure you understand what you’re signing up for. Let’s break down how Forward Financing advances work.
Forward Financing loan options
Forward Financing offers only revenue-based financing―which, as we said, is just a merchant cash advance.
That means that your payments will be a percentage of your revenue. Interestingly, though, Forward Financing says it takes payments from your bank account. (Most MCA companies take their cut directly from your credit card sales.) You can end up with either a daily or weekly payment schedule.
One good thing about Forward Financing’s advances? The speed. You can get approved the same day you apply. You may even be able to get your money the same day (though you’ll have to pay an extra wire transfer fee to do so ). Otherwise, you’ll get your advance the next business day.
Forward Financing financing
Unfortunately, Forward Financing offers absolutely no pricing information. Merchant cash advances come with a flat fee, rather than interest. (This is why MCAs don’t count as small-business loans, though they are a type of working capital.) And according to reviews we saw, Forward Financing’s fee ranges from 35% to 97% of your advance. That’s pricey―but that’s what you get from merchant cash advances.
Now, you can get a discount on your fees if you repay your advance early. (Forward Financing doesn’t charge prepayment penalties.) As a Forward Financing rep explained to us, you can get 2% off your owed balance for every 30 days between your early (full) repayment date and your original repayment date. But there are a lot more rules and details to it than that, so make sure you read and understand your contract before you bank on that discount.
If you end up liking Forward Financing, you may be able to get another loan once you’ve paid off 60% to 80% of your advance. We recommend you don’t do this (merchant cash advances are known for causing debt spirals), but you do have that option.
That pretty much sums up Forward Financing’s advance. Again, we’re not fans of any MCAs, and Forward Financing’s cash advances don’t especially wow us either. But Forward Financing’s small-business customers see things a little differently.
As we’ve said, one reason we don’t like MCAs is because they’re often too confusing to borrowers. To its credit, Forward Financing talks with all its customers to make sure they read and understand their contract. That doesn’t solve all our concerns about MCAs, but it seems like a step in the right direction.
Forward Financing customer reviews
As we’ve noted a couple times now, Forward Financing has mostly positive reviews. It has a 4.9 out of 5 on Trustpilot, or an “excellent” rating.1
The positive reviews praise how easy Forward Financing’s application is. Customers also like the fast approval and funding times. (One business owner even reports getting funding just 12 hours after applying.) Many borrowers also say that Forward Financing has good customer service, with helpful reps who answered all their questions.
The negative reviews largely talk about the high costs of funding. Some borrowers also complain they didn’t understand how Forward Financing’s advance model actually worked before applying (not surprising, given its website). We also saw a couple negative reviews that say Forward Financing hasn’t been understanding to businesses affected by the COVID-19 pandemic.
For what it’s worth, Forward Financing responds to just about every review.
Forward Financing can help your company with its cash flow needs―but make sure you understand its pros and cons before you apply.
Forward Financing has great customer reviews and offers fast funding times. Plus, it has pretty reasonable borrower requirements. But, well, it only offers merchant cash advances―complete with the very high fees that come standard with those.
Those cons keep Forward Financing from ranking as one of our favorite lenders. If you decide to fund your business through Forward Financing anyway, we simply urge you to borrow carefully and make sure you understand what you’re committing to.
Compare Forward Financing to other small-business lenders with our rankings of the best working capital loans.
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