Why We Charge What We Charge

How We Determine Your Funding Amount

The amount of financing a business qualifies for is determined by multiple factors including, but not limited to, business cash flow, time in business, and credit history. The detailed assessment of this criteria and how we use it to determine a factor rate, and ultimately the total payment amount, happens during our underwriting process.

  • Underwriting Process – Once an application is submitted, we conduct a full, upfront underwrite. Our underwriting process involves both our advanced technology and experienced, well-trained professionals. This helps us to closely assess the financial health of each business and the amount of risk associated with providing funding to each business. Underwriting is typically based on criteria like the business’s revenue, growth potential, and other factors, such as industry, time in business, and seasonality. Through our underwriting process we’re able to determine a factor rate, or the cost of funding, for each application.
  • Factor Rate – Revenue-based financing providers typically use a factor rate, not an interest rate. A factor rate is a multiplier, expressed as a decimal, that’s applied to the funding amount to determine the total payment amount. The more risk a provider assumes, the higher the factor rate. With revenue-based financing, the customer knows exactly what their cost of financing will be before funding, regardless of how long it takes to remit the total payment amount. With a loan, the longer it takes to pay off, the more interest a customer will pay.


Why It Can Seem More Expensive

Revenue-based financing is not a low-cost way to obtain working capital. That’s because the features included in this product to support small businesses are costly for Forward to provide. Our approach is always to charge our customers a fair amount, while being mindful of the cost to serve on our side.

There are several unique benefits that you won’t typically get with traditional business financing, built into the design of this solution. It’s these benefits that also drive the cost of the product.


  • Attainable Eligibility Criteria – We believe every business deserves financial opportunity, and our product is set up to support that idea. Our eligibility criteria are more attainable and realistic for businesses at various stages, so we’re often able to say “yes” when other financial institutions say “no.” Helping this underserved set of small businesses is important to us, but it does introduce risk, which we need to account for in our pricing.
  • Flexible Product – If a business’s revenue decreases, their payments can too, without interest ever accruing. We also offer customers reconciliations, resulting in refunds, when they pay their contracted amount while their revenue is in decline. And if there is no business revenue, there will be no requirement to pay or personal liability, as long as you abide by your contract. That means we assume a higher level of risk than traditional financial institutions, and the cost of our product reflects that.
  • Speed of Funding – Our simple application is typically followed by a decision within hours and transfer of funds often same-day. So businesses can get their funding in days, not months. Speed like that is unheard of with traditional financing providers.
  • Opportunity to Build Business Credit – Customers told us building business credit – and purchasing power – is important to them. That’s why we report customer performance to Experian Business Credit, who in turn calculates business credit scores. For small businesses with good payment history, this is a unique opportunity to get revenue-based financing, while building business credit.