Fora Financial Review

Fora Financial is a New York City-based alternative lender that specializes in meeting the funding needs of small businesses. It offers short-term business loans and a specialized type of financial product available exclusively to retailers known as a merchant cash advance (MCA). Fora Financial was founded in 2008 and, notably, it does not impose any minimum credit score requirements on its customers.

As of October 2020, Fora Financial has funded almost 25,000 businesses through more than 41,000 individual loans with a combined value of over $2 billion. In this review, we’ll take you on a deep dive into the company’s loan programs. We’ll examine Fora Financial’s pros and cons, and weigh in with our take on whether you should consider it for your next small business loan.

Loan Types and Industries Served

Fora Financial offers two main loan programs: small business loans and MCAs.

The company’s small business loans work like conventional loans: approved applicants receive the full amount of their proceeds in a lump sum, then pay back the loan in instalments over a specified period of time.

MCAs function as a unique alternative for retailers and merchants who generate high volumes of credit and debit card sales. These financing solutions work a little differently. Borrowers receive funding in an up-front lump sum, the same as they would with a conventional loan. However, instead of paying down the loan in instalments, Fora Financial will take a small percentage of your daily card-based sales until the balance has been paid in full.

Fora Financial works with a wide range of borrowers, but prefers companies that operate in the following industries and sectors:

Also, prospective customers should note that Fora Financial does not offer financing to businesses in the following industries:

Businesses with open bankruptcy filings or bankruptcy declarations that have been discharged within the past year are also ineligible.

Loan Terms

Information published on Fora Financial’s website in October 2020 indicates their general loan terms break down as follows:

For small business loans:

Fora Financial also stresses that its loan decisions are not informed solely by credit scores, but does not offer any further specifics. To learn more, prospective customers should contact a customer service representative by phone or submit an application to get a no-obligation quote.

For MCAs:

Fora Financial doesn’t publish details about its fees and interest rates, but external sources indicate their standard factor rates usually range from 1.1 to 1.3. Reviewers also note that many of its loans are subject to origination fees ranging from 1% to 4% of your loan’s value.

A factor rate is an alternative way to express interest rates. To figure out how much you will need to repay, multiple your loan amount by the factor rate. For example, if you borrow $100,000 at a factor rate of 1.2, you must repay $120,000. That is tantamount to 20% interest, though it is charged at a flat rate rather than compounded annually.

Fora Financial’s Eligibility Requirements

One appealing aspect of Fora Financial is that the company does not evaluate an applicant’s business credit rating during its underwriting process. Some of its loan programs consider borrowers’ personal credit scores, and there are also no firm minimum requirements in this regard either. Thus, Fora Financial shines as a source of loan capital for credit-challenged companies and entrepreneurs.

The only known firm eligibility standards include:

Fora Financial has a reputation for being inflexible about these requirements, but even so, they still make a very broad base of prospective borrowers eligible for the company’s loan programs.

The Fora Financial Application Process

Fora Financial supports a fast, easy application process. Customers need only fill out a one-page application form and provide a few bits of verified documentation, including proof of identity and several months worth of business bank statements. From there, Fora Financial can make a decision on your application within 24 hours.

You should be aware that Fora Financial will perform what is known as a “hard credit pull.” This means they will make a formal inquiry on your credit report and review it in detail, which will temporarily reduce your score. This won’t affect the status of your Fora Financial application, as the company does not impose credit score minimums. However, it could adversely affect you in the short term if you ultimately decide to seek a loan somewhere else.

If you are approved, Fora Financial will release your loan proceeds within 72 hours. While this is not the shortest turnaround time in the alternative lending industry, it is much faster than what you would get with a traditional bank.

Pros and Cons of Fora Financial

Here’s what reviewers and actual customers like about Fora Financial:

You should weigh these benefits against Fora Financial’s downsides:

What Others Are Saying about Fora Financial

Fora Financial has been accredited by the Better Business Bureau (BBB) since 2011. As of October 2020, the BBB gives Fora Financial an A+ rating while noting that only two BBB complaints against the company were closed in the previous year and only six were closed in the past three years.

Over on Trustpilot, Fora Financial has earned an average rating of 4.4 out of 5 from more than 560 reviews as of October 2020. Of those reviews, 83% awarded the company a perfect 5 out of 5 score while 93% gave it 4 out of 5 or higher.

The Bottom Line

Fora Financial’s appeal largely comes from its lack of credit score requirements, making it a good place for credit-challenged borrowers to seek funding. There are a few other must-know factors to keep in mind:

Given these features, Fora Financial primarily shapes up as a strong option for entrepreneurs and business owners facing credit challenges.