Fora Financial Business Loans: 2023 Review
Pros and cons of Fora Financial
Early payoff discounts
Easy credit qualification
Decent customer service
High origination fees
Limited funding options
Relatively slow funding times
Only daily or weekly payment options available
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Fora Financial small business loans review
Fora Financial was launched in 2008 by two friends who are still with the company today as board members. Despite the bad timing in getting off the ground, they’ve managed to stay the course and have since given out over $2 billion in loans to over 25,000 business owners, according to the company.
Compared to other small business lenders, Fora Financial offers relatively few products: only a short-term small business loan or a merchant cash advance (MCA). However, if you’re a small business owner with less-than-perfect credit, you might find you’ll have an easier time getting approved with Fora Financial compared to other options.
Who is Fora Financial for?
- You’re clear on your financing needs. Other lenders offer many more financing options and can help you select the best one for your needs. With Fora Financial, you only get two options: a short-term business loan or a merchant cash advance.
- You don’t have stellar credit. You only need a minimum credit score of 500 in order to qualify for financing. That’s a lot lower than the minimum at many other lenders.
- You don’t need the money immediately. It can take up to three days to get funding if you’re approved. That’s a lot quicker than most traditional bank loans, but there are many other online lenders that offer same-day funding for true emergencies.
Fora Financial small business financing at a glance
|Product||Loan amounts||Repayment term||Estimated APR range||Fees|
|Small business loan||$5,000-$1,400,000||4-15 months||1.10-1.35 factor rate||Origination fee: $300 or 2.50% of the loan amount, whichever is higher|
|Merchant cash advance||$5,000-$1,400,000||Varies based on your credit card transaction volume||1.10-1.35 factor rate||Origination fee: $300 or 2.50% of the loan amount, whichever is higher|
Fora Financial‘s small business term loans work a bit differently than you might be used to. Rather than charging an interest rate that you can compare with other short-term business loans, Fora Financial charges a factor rate. This is more typical of MCAs and invoice factoring, and the fee is presented as a fraction of the amount you borrow. Fora Financial’s 1.10–1.35 factor rate translates to 10%-35% of your loan amount.
Add the origination fee onto that (2.50% or $300, whichever is higher), and you’re looking at comparable APRs between 17.00% and 200.00%. In addition, these loans are repaid via weekly or even daily payments, not monthly as per most business term loans.
Merchant cash advance
Fora Financial‘s MCA has many of the same features of the term loan, except for one big difference: Repayment takes place over a variable time frame based on your credit card sales. The company will specify what percentage of your credit card sales it will claim, known as a holdback percentage.
For example, if Fora Financial specifies a holdback percentage of 20%, then you’ll need to send that amount of your credit card sales each week or each day back to Fora Financial until the loan is repaid. This gives you a flexible payment option since your payment scales based on your credit card sales, but you’ll need to ensure your company can operate in the interim with that smaller amount of profit.
Fora Financial borrower requirements
|Minimum annual revenue||$60,000 in credit card sales or $144,000 combined among all transaction types|
|Minimum time in business||Six months|
|Minimum credit score||500|
One of the main selling points for Fora Financial is its ease of approval.
The credit requirements are fairly lax: You’ll just need a minimum 500 credit score and no bankruptcies on your credit file within the previous year (nor any open bankruptcies, for that matter). Newer enterprises with just six months of time in business are eligible to apply. In addition, businesses earning as little as $60,000 in credit card receipts or $144,000 in total receipts per year are also eligible for financing.
To speed up your application process, it’s a good idea to round up the required documents you might need in advance. Here’s a full list of the documents Fora Financial may ask to see when deciding whether to approve you for financing:
- Prior business tax returns
- Copy of your driver’s license
- Proof of business ownership
- Current business balance sheet
- Current profit-and-loss (P&L) statement
- Voided check from your business bank account
- Three most recent business credit card statements
- Three most recent business bank account statements
Alternatives to Fora Financial
Fora Financial’s business loan products could be a good option for a working capital loan — flexible short-term financing that can be used for business operating expenses. But here are some other funding options to consider first.
|Fora Financial||Credibly||TD Bank|
|Minimum credit score||500||500||None|
|Loan products offered|| |
|Time to funding||Three days||As soon as same day||Not specified|
|Starting APR||Factor rate: 1.10|| |
|Maximum loan size||$1,400,000||$20,000,000||$1,000,000|
|Minimum annual revenue||$60,000 in credit card sales or $144,000 among all transactions combined||$180,000||Not specified|
Fora Financial vs. Credibly
If you’re looking for more funding options, Credibly might be a better lender to consider. In addition to offering three times as many choices as Fora Financial, Credibly‘s lowest rates are much cheaper, and it’s a faster lender, too. The downside is you will need to be operating on a slightly higher revenue level, even though the credit requirements are similar between the two lenders.
Fora Financial vs. TD Bank
If you’d rather work with a larger lender, TD Bank is a decent option. It doesn’t specify the funding timelines for its loans; however, TD Bank is a Small Business Administration (SBA) Preferred Lender. This means that TD Bank should be able to process your SBA loan faster than a regular, nonpreferred SBA loan lender. The downside is that if you’re applying for $100,000 or more, you’ll need to apply in person, and TD Bank only has retail locations in 15 states and the District of Columbia.