OnDeck is an online lender focused on meeting the financing needs of qualified entrepreneurs and small business owners. The company was founded in 2006 with the goal of making small business financing more accessible. As of 2020, OnDeck has originated more than $13 billion in loans, making it one of the most prolific alternative lenders in the United States.
As stated on OnDeck’s website, the company knows that “a small business is more than just a credit score.” The company uses advanced data-driven analytics to thoroughly evaluate the many quantitative and intangible factors that contribute to the success and stability of a small business. This makes OnDeck a more inclusive lender than traditional banks and financial institutions.
In this guide, we’ll break down OnDeck’s lineup of small business financial solutions, examine its strengths and drawbacks, and offer our take on whether you should consider OnDeck for your next loan.
OnDeck’s Loan Types
OnDeck offers two main small business financing programs:
- Term loans for small businesses that forward the borrower a fixed sum of money, which is then repaid over a predetermined period of time
- Business lines of credit that offer a form of “revolving debt,” enabling the borrower to access funding up to their credit limit on an ongoing, as-needed basis
OnDeck is also a partner lender in the U.S. Small Business Administration’s lending network. It was an authorized provider of SBA Paycheck Protection Program (PPP) loans, but as of October 2020, the SBA has suspended its PPP program and OnDeck is no longer taking applications for it.
The following information about OnDeck’s loan options was sourced from the company’s website in October 2020.
First, let’s look at OnDeck’s term loans:
- Borrowers can access $5,000 to $250,000 in funding
- Repayment terms vary and can extend to as much as 18 months
- Loan payments are configured as automatic, and can be made daily or weekly
- Payments are for fixed, predictable amounts
- Borrowers can get same-day funding
- Qualified borrowers can enter OnDeck’s 100% Prepayment Benefit plan and have all interest charges remaining on their loans waived if they pay it off early
OnDeck reports your term loan payments to credit reporting bureaus, making the company a great way for borrowers to build credit.
Here’s a look at OnDeck’s business lines of credit:
- Customers can access revolving lines of credit from $6,000 to $100,000
- Lines of credit come with 12-month repayment terms, which reset every time you make a new withdrawal
- Payments are automatic, and are made on a weekly basis
- Payments are consolidated for all withdrawals, freeing borrowers from the need to maintain confusing payment schedules
- Funding is available instantly upon approval
- There are no prepayment penalties
For each financing option, would-be borrowers follow a simple three-step process:
- Complete an application online or by phone.
- Review your options with one of OnDeck’s in-house loan advisors and await a decision on your application.
- Access your funding upon approval by completing an easy online checkout and document filing process.
OnDeck excels at providing timely financing solutions, and many customers can receive their funding on the same day they are approved.
Notably, OnDeck does not publish specific information about its factor rates or interest rates on its website. As with most lenders who consider credit-challenged borrowers, its rates tend to be higher than those charged by traditional banks. However, this is balanced out by the fact that it is much easier to get approved for a loan from a lender like OnDeck.
Who Qualifies for an OnDeck Loan?
OnDeck prides itself on a flexible application process that does not rely solely on your credit score. However, there are a few firm eligibility standards borrowers should keep in mind:
- Businesses must have a minimum of 12 months in operation
- Annual revenues must be $100,000 or more
- Borrowers with FICO credit scores of 600 or higher stand the best chance of approval
OnDeck does not explicitly require borrowers to put up collateral. However, they do need to offer a personal guarantee, which means that your personal assets could be at risk if you default on your loan. Some loans also require a business lien, which presents additional hazards if you cannot meet your repayment obligations.
Pros and Cons of OnDeck
Key advantages of OnDeck as a small business lender include:
- The company provides funding very quickly, with loan proceeds being released same-day in many cases
- OnDeck maintains a fast, efficient application process with relatively little paperwork
- Credit-challenged borrowers can qualify
These benefits also come with the following drawbacks:
- Minimum annual revenues of $100,000 are required, which is a relatively high cutoff
- Borrowers may be asked to provide personal guarantees and/or business liens
- Payments are frequent (daily or weekly)
What Others Are Saying about OnDeck
OnDeck’s Better Business Bureau (BBB) profile displays an A+ rating as of October 2020. As of that date, the company has nearly 130 registered customer reviews, which show an average score of 3.8 out of 5. This is a very strong showing for the BBB, which tends to generate lower weighted average scores since most customers who rate businesses through the network do so after filing a complaint.
On Trustpilot, OnDeck has a fantastic track record with an aggregate score of 4.9 out of 5 across nearly 2,700 reviews as of October 2020. A whopping 95% of customers gave OnDeck a perfect score, while 98% rated them 4 out of 5 or better.
These are both very impressive metrics.
The Bottom Line
Given OnDeck’s business model and lending profile, it is a best fit for those who:
- Need fast access to cash or loan capital
- Have personal credit scores that are not perfect
- Are facing significant, unanticipated expenses
- Have uneven or unpredictable cash flow levels and need to borrow to keep things running smoothly
OnDeck is quick, easy, and offers more advantageous terms to repeat customers. It’s also easier to qualify for a loan or line of credit through OnDeck than a typical bank. However, its loans also cost more than those offered by traditional financial institutions, making the company a good match only for borrowers who struggle to qualify for bank or credit union funding.