Forward Advances aims to lend £ 250m to small businesses by 2023

Originally written by Timothy Adler about Small Business

Forward Advances, the merchant prepayment provider, aims to bring £ 250m in cash to small businesses in the e-commerce space by 2023.

The lender, founded in April 2020, is part of a new wave of small business lenders who base their lending decisions on your monthly sales. In the past few months, Clearbanc and eBay have launched their own versions of what is known as the Merchant Cash Advance in the UK, while PayPal has been offering this for some time.

By linking the technology to your banking information, accounting software, or social media ad accounts, a lender has a real-time view of your monthly income. This means that the repayments fluctuate as a percentage of income and are not a fixed amount each month as is the case with a bank.

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Although well established in America and Sweden, where the concept originated, cash advances from merchants in the UK are still a relatively new concept.

Hasam Silva, General Manager of Forward Advances, said: “In the US, cash advance or revenue-based financing is a well-known product, but less so in the UK. Half of all the founders I spoke to last year hadn’t even heard of the concept, which was a challenge. “

How Forward Advances Works

To date, Forward Advances has loaned around 50 small businesses with an average loan of £ 50,000.

One of the advantages of using open banking technology is that credit decisions can be made in a matter of days.

Forward Advances can lend between £ 10,000 and £ 1 million with an average repayment period of between five and six months.

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The lender charges a fixed fee of 6 percent for its services with an income corridor between 10 and 30 percent of monthly income.

To qualify, a small business must have at least six months of sales data and a monthly income of over £ 10,000.

Forward Advances, an offshoot of the Seed Venture Capital fund Forward Capital, can provide loans to any sector, but specializes in e-commerce, marketplaces, and B2C software-as-a-service (SaaS).

The previous cash comes from parent company Forward Partners, but is about to sign a credit facility with an institutional lender, so 80 percent of its future capacity will be funded by institutional debt.

So far, the 50 small businesses that have drawn Forward Advances cash have split the money evenly between digital marketing and buying stocks.

Silva points out that companies that only spend on digital marketing and don’t have the inventory to handle sales aren’t serving the customer. Conversely, the stock is unsold on your shelves.

As part of the offering, Forward Advances is offering a free one-on-one session with a business mentor with up to three hours of counseling to help clients plan their business growth and scale their e-commerce business.

Silva said: “We can provide support even if we do not do the daily execution. We can also connect our customers with paid social media advertising experts. “

Over time, Forward Advances would like to have its own in-house social media team that can help small businesses navigate the increasingly complex world of social media campaigns.

Silva said, “The value we add makes it more tailored and personalized for e-commerce than someone like PayPal.”

Silva shakes off any speech about the death of the main street – all that happened is that the main street went online.

And e-commerce giants like Amazon aren’t impressed either.

According to him, the next era of the internet will be about offering their target customers much smarter, more curated products or a brand that focuses on doing a certain product really well, such as the latest start-up series winner and Forward Advances, Bedfolk customers.

further reading

Small Businesses That Are Having Difficulty Obtaining Loans From The Recovery Loan Scheme

Forward Advances aims to lend £ 250m to small businesses by 2023

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