Forward Financing provides $5,000 to $500,000 of working capital to United States small businesses, using recent cash flow and credit information to make decisions for owners who may not qualify at a bank. The Boston fintech announced an agreement under which a private-credit fund will buy up to $1.8 billion of advances over three years, adding capacity for new originations.
An owner applies online, submits basic business and owner information plus recent bank statements, and receives a decision that Forward says typically arrives within hours. If the owner accepts the offer, the company can deposit funds the same day. Repayments begin within a week and are automatically drawn daily or weekly from the business bank account.
The forward-flow purchaser is described only as a New York-based private-credit fund. It committed to buy up to $1.8 billion of advances during the three-year term, with purchases scaling alongside Forward’s funding volume and covering both revenue-based financing and business loans. The release did not disclose pricing or how credit risk will be divided after an advance is sold.
Forward’s revenue-based product exchanges upfront capital for an agreed amount of a business’s future revenue. Payments represent a percentage of revenue and can decline when sales fall, while the total contracted payment remains fixed. Its installment loans instead carry equal payments, a fixed term and precomputed interest; both products typically run from three to 18 months.
The company reported providing more than $5.4 billion to over 100,000 small businesses since 2012. That compares with more than $5.2 billion and nearly 97,000 businesses when Forward announced $525 million of financing in July, comprising a $350 million variable funding-note facility and a $175 million asset-backed securitization.
The new buyer gives Forward a way to replenish capital as it originates more advances, alongside its warehouse and securitization funding. The business question is how the buyer’s purchase criteria affect which customers Forward can fund—and how much credit risk and servicing income Forward retains after those advances leave its balance sheet.