Fora Financial reviews reflect the company’s professionalism, rapid funding abilities, and ease of use. Despite the high cost of borrowing through Fora Financial, customers and experts agree that young businesses needing fast cash of up to $1.5M can benefit from working with the company as long as the customer is aware and comfortable with the price of borrowing.
The struggle when comparing Fora Financial to other online lenders and traditional bank loans is that the company uses factor rates to determine the repayment terms instead of interest rates or APR. While factor rating is generally more straightforward to use, most of us are more familiar with and fluent in how interest rates work rather than factoring.
Fora Financial’s factor rating starts low at 1.10. However, borrowers with poor credit could face factor rates of up to 1.9. The company offers just two loan products, including its small business loan and what it calls a Revenue Advance loan, which functions like a merchant cash advance, with some important distinctions.
While Fora Financial can be an excellent business financing tool in the right situation, proper investigation of any lender is crucial when making a substantial decision for your business. Here’s everything you need to know about Fora Financial and how to determine if the company is right for your business needs.
Pros
Funding available in 24 to 96 hours
Low credit score requirements to qualify
Businesses as young as six months old can qualify
Up to $1.5 million loan amounts available
Low starting factor rates
Cons
Substantial origination fee applies
Wire transfer fees apply
Only two financial loan products are available
Long-term loans unavailable
Fora Financial Reviews: Features and Benefits
Despite offering just two loan products for small businesses, Fora Financial provides a long list of features and benefits that work well with a variety of business types. The primary difference between Fora Financial and more traditional lenders is the use of factor rating to determine the customer’s borrowing cost.
- Two borrowing options are available
- Pre-qualify without a hard credit check
- Charges factor rates instead of interest rates
- Factor rates from 1.10 to 1.90
- No prepayment penalties
- Early payoff discounts are possible
- Highly rated company
- Loan amounts of up to $1.5 million
- Minimum loan amount $5,000
- Four to 15-month repayment terms
- Origination and wire transfer fees apply
- Origination fees equal higher of 2.5% or $300
- Minimum credit score 500
- Minimum business age 6 months
- Minimum revenue to qualify is $180,000 annually
- Funding within 24 to 96 hours after approval
Fora Financial Reviews: Editorial Rating
Trusted Company Reviews Rating Score for Fora Financial Business Loans: 9.2
The high cost of borrowing through Fora Financial doesn’t seem to be an overwhelming trouble spot for business owners who are aware of the fact before committing to a loan from the company. We rate the company high on our list of the best startup business loans.
Fora Financial’s partner company, LendingTree, also rates the company highly and awards it the title of being best for business owners with bad credit.
Factors in our evaluation of Fora Financial and its competitors reveal the company to be upfront about its cost, awarded with excellent customer reviews, flexible in terms of lending to those with poor credit, and able to work with young companies. Fora Financial routinely approves financing for businesses just six months old and owners with credit scores as low as 500.
However, because we consider hard facts along with customer sentiment in our evaluations, we have to deduct points from Fora Financial’s review score for its high cost and use of lesser-known borrowing cost calculations, which can make determining the total price challenging.
| Funding Type | Rates | Terms |
| Fora Financial Small Business Loan | 1.1 – 1.9 factor rate | 4 – 15 months |
| Fora Financial Revenue Advance | 1.1 – 1.9 factor rate | Variable |
Direct Lender Online Loans and Small Businesses
New business owners often have a long list of questions about obtaining a business loan. Often among them is where to get funding. While banks and SBA lenders have strict qualifying criteria, including being in business for a substantial time, getting financed as a new company can be challenging.
While online lending does have some bad players, and borrowers must thoroughly examine their chosen lender for legitimacy, most are on the up and up, albeit usually far more expensive than traditional borrowing.
The U.S. Department of the Treasury performed a study by gathering over 100 responses from, “…online marketplace lenders, trade associations, consumer and small business advocates, academics, investors, and financial institutions.”
While the report is long, small business owners can take comfort in the following findings contained within.
| “RFI (request for information) commenters argued that marketplace lending has the potential to unlock access to the capital markets for small business borrowers. Structural challenges in the small business lending market can often make it difficult for business owners to obtain affordable credit. RFI commenters suggested that providing small and microbusinesses with smaller loans in a shorter time period is changing the available avenues for capital for these companies. Small business online marketplace lenders responded that their target customer include: (i) small businesses with good credit seeking immediate capital; (ii) small businesses unable to receive loans from community banks due to small loan requests; (iii) small business owners with low personal FICO scores; and (iv) online businesses lacking hard assets that could serve as collateral. Although target customers have positive cash flows, small business online marketplace lenders state they often service business owners who may have weaker personal FICO credit scores. Some companies offer working capital loans as small as $300, while others offer loans up to $500,000. Companies offering term loans to small businesses tend to charge rates ranging from 8.00 – 25.00 percent APR to 7.30 – 98.40 percent APR.” |
About Fora Financial Business Loans
Fora Financial offers two types of business lending products. The first, its small business loan, features borrowing amounts of up to $1.5M. The company determines the repayment cost using cost factoring from 1.10 to 1.90 and offers terms of between four and 15 months.
The second product is Fora Financial’s Revenue Advance loan. The financing also uses a factor rating from 1.10 to 1.90 to determine the repayment cost. However, the loan length terms are flexible based on your company’s sales volume.
Both of Fora Financial’s loan products feature relaxed approval requirements that include just six months of business history and a credit score of just 500. However, higher credit scores and more experienced businesses will likely receive much more favorable factor rates. The company also charges a 2.5% or $300 (whichever is greater) origination fee and a variable wire transfer fee for its loan products.
Of particular interest to Fora Financial clients is the potential ability to increase the loan amount after reaching a balance lower than 40% of the original financing. Also available is a discount that Fora often awards for paying off the debt early.
Fora Financial loan products are available through the company’s online website or through its partner company, LendingTree’s site. LendingTree provides an online marketplace for finding business financing, the best personal loans, and the best debt consolidation options.
Prequalification is always available regardless of where you apply for a Fora loan. The step allows you to see the potential loan terms and costs before committing to a hard inquiry by formally applying. Fora Financial only performs a soft credit inquiry for pre-qualifications that won’t affect your credit score or appear on future inquiries. However, Fora will likely perform a hard inquiry upon formal loan application.
Fora Financial Interest Rates
Fora Financial doesn’t use interest rates to determine the borrowing cost of its loans. Instead, the company uses a factor rate for the purpose—factor rates through Fora Financial range from 1.10 to 1.90.
How Fora Financial Factor Rates Work
Calculating a factor rate to determine the total cost of your Fora Financial loan isn’t normal for many of us. However, the process is straightforward. The trick comes when trying to convert the factor numbers to an APR that you may be more familiar with. Here’s how:
- Use the factor rate expressed as a whole number, such as 1.1 or 1.5, etc.
- Keep in mind that the rate only applies once and only to the total borrowed amount. The rate doesn’t fluctuate over the course of the loan.
- Calculate the total cost of the loan by multiplying the principle by the factor number. (For example, $10,000 loan X 1.2 factor rate = the total you owe: $12,000)
- To determine the borrowing fee, subtract the principal amount from the total you owe. ($2,000)
- To convert to a rough interest rate, divide the fee by the principle. ($2,000 / $10,000 = 0.2)
- Determine the annualized interest rate by multiplying the sum by 365 (365 X 0.2 = 71)
- If your loan repayment term is six months, divide the answer by the loan term in days. (71 / 183 = .3879) Multiply by 100 to reach 38.79% interest.
- Determine the APR, which, in this case, would be between 70% and 80%, by calculating in fees, payment frequency, and the precise payment amounts.
Fora Financial Borrowing Requirements
Fora Financial’s two borrowing options feature relatively relaxed qualification criteria. The best factor rates will apply to those with excellent credit and longer business histories. However, Fora also often approves borrowers with lower credit scores and younger businesses. The minimum requirements to obtain funding through Fora Financial include the following:
- Six-month business history
- Business accounts documentation and records
- $180,000 minimum annual revenue
- Minimum credit score of 500
Fora Financial Reviews
Fora Financial reviews are generally positive. The company’s clients appreciate Fora’s ease of use, rapid (24-hour) application process, relatively quick funding within 24 to 96 hours, and relaxed approval requirements.
Reviewers on Trustpilot rate Fora Financial 4.5 out of 5 stars, with 82% of consumers awarding the company 5 stars, while 7% give it 2 stars or below. Fora Financial also carries an A+ grade at the BBB, where it maintains a 3.08 out of 5 stars rating.
Despite the company’s high overall ratings, some negative reviews exist. Unhappy customers report aggressive sales tactics, confusing loan terms, and costly fees and rates.
5-star
“Fast with loans very helpful if not able to pay they extend your loans.” – Gary, BBB
4-star
“From the time I contact Fora to today, they have been nothing but professional and helpful. When I need money to help and expand my small trucking company, they were there with a very simply, straightforward loan with terms that I knew my company could repay. My rep ********* keeps me informed through email ANYTIME there is a change to my account.. My loan is over 60% paid off and if I needed funds again Fora will get my business again!” – Brian, BBB
3-star
“Fast service but interest high from underwriter which is Yellowstone Capital (Partners). Too much fee involved. But Fora Financial is thumbs up.” – Albert, Trustpilot
Who Is a Fora Financial Business Loan Best For?
Fora Financial can provide useful tools for many types of businesses, regardless of age or credit history. However, its partner company, LendingTree, rates the company as excellent for borrowers with bad credit.
The results of our evaluation of the company reveal the same truth. Businesses and borrowers with excellent credit and long business histories will likely find cheaper borrowing options through other online lenders or more traditional financing sources.
However, owners with poor credit scores or new businesses that need a quick fix of cash are the most likely to benefit from Fora Financial products, provided they understand the cost of borrowing from a high-risk lender.
Frequently Asked Questions
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Source
Image Sources: forafinancial.com – trustpilot.com
Deane Biermeier
