Safeguarding Ethical Alternative Financing

January 31, 2025

Access to capital remains a significant challenge for small businesses in the US, with nearly 50% of small business loan applications being declined, according to a 2024 Small Business Administration (SBA) report. Alternative financing has stepped in to fill this gap, but with that opportunity comes an important responsibility to operate with integrity, transparency, and fairness. Every company in the small business financing sector has a duty to each other to uphold ethical standards to support a healthy, thriving ecosystem.

At Forward, we believe that compliance is more than just following the rules, it’s about doing the right thing. By maintaining rigorous compliance standards, we’ve helped to build confidence in our services and foster long-term relationships with our customers and business partners. Here, we’ll explore three key methods to promote ethical standards in alternative financing.

• Provide Transparent Information – Small business owners should have a clear understanding of the funding they receive—what it costs, how payment works, and what terms apply. Confusing or vague disclosures can place unnecessary financial strain on customers. Funding providers should present information in a straightforward, easy-to-understand manner. Forward customers will always find the cost of our financing clearly outlined on the front page of our contract. By proactively adopting ethical practices like this, we protect both our customers and our business, while contributing to the overall integrity of the industry.
• Stay Ahead of Regulatory Changes – The regulatory landscape for small business financing is constantly evolving. In recent years, multiple states have introduced laws requiring commercial financing providers to disclose standardized terms to customers. These measures aim to help business owners compare financing options more effectively. Staying on top of these regulatory changes is crucial for compliance. Forward has a dedicated team monitoring new laws at both the state and federal levels, ensuring that company policies align with the latest legal requirements. Quickly and fully adapting to regulatory changes demonstrates our commitment to responsible financing.
• Cultivate a Culture of Ethical Business Practices – Beyond compliance with laws, companies should foster a culture of ethical decision-making. This means prioritizing the customer experience and ensuring fair treatment. When financing providers operate with integrity, they build trust with customers and support a more sustainable marketplace. Doing the right thing is embedded in our culture and core values at Forward, guiding the decisions we make every day—from our frontline team members to our executive team.

Final Thoughts

The need for alternative financing solutions for small businesses is clear. Yet, without proactively adopting responsible practices, the industry risks increased regulation that could further restrict the already limited funding options available. By prioritizing compliance, transparency, and ethical decision-making, we can collectively help to ensure that alternative financing remains a viable option for small businesses.