OnDeck Small Business Loans Review

About OnDeck

OnDeck

OnDeck has business financing that is tailored for today’s small businesses, with fast access to capital, a streamlined and efficient application process, and service customers rave about. Our mission is to be the first choice lender for small businesses. Since 2007, we’ve issued billions in loans and served more than 700 industries throughout the US, Canada, and Australia.

review breakdown

Recommended
100%
Interest Rates
Fees & Closing Cost
Customer Service
Responsiveness

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What is OnDeck?

OnDeck was founded in 2007 to provide access to capital to small business owners. The New York-based online lender assesses businesses based on overall performance, not just the owner’s credit score.

Since launching, OnDeck has issued more than $8 billion to more than 80,000 small businesses across 700 industries.

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What does OnDeck offer?

OnDeck offers short- and long-term loans as well as lines of credit to qualifying business owners. Payments are due daily or weekly, depending on the terms of your financing.

OnDeck: At a glance
Loan product Loan amount Loan term APR range/ factor rate Fees Time to funding
Short-term loan Up to $500,000 3 to 12 months As low as 9% Simple Interest.

(average rate is 25.3% Simple Interest)

One-time origination fee

1st loan: 2.5%-4% of loan amount

2nd loan: 1.25%-3% of loan amount

3rd+ loan: 0%-3% of loan amount

As soon as 24 hours, but it could take longer if additional underwriting information is required.
Line of credit Up to $100,000 Fixed weekly payments As low as 13.99% APR.

Average rate is 32.6% APR

$20 monthly maintenance fee, which is waived for the first six months if you withdraw $5,000 or more from your account in the first five days As soon as 24 hours, but it could take longer if additional underwriting information is required.
Long-term loan Up to $500,000 15 to 36 months As low as 9.99% Annual Interest Rate (AIR).

(average rate is 48.7% AIR)

Same one-time origination fees as short-term loans As soon as 24 hours, but it could take longer if additional underwriting information is required.

Rates current as of 9/27/2018


Who is OnDeck best for?

OnDeck financing is targeted toward business owners who have trouble securing traditional bank loans because of poor credit. The company looks beyond credit score and takes additional metrics into consideration when evaluating borrowers, such as cash flow, transaction data and public records related to the business,

To help you improve your credit score, OnDeck reports information about your business’s loan repayments each month to three national credit bureaus – Experian, Equifax and Paynet. For customers with a line of credit, OnDeck solely reports to Experian on a monthly basis. On-time payments to OnDeck would reflect positively on your business credit profile and help you improve your overall score.


Who should avoid OnDeck?

OnDeck works with businesses in most fields, from dentist offices to martial arts studios, but the company restricts its services. OnDeck does not work with businesses in a number of industries, listed below.

These businesses are not eligible for OnDeck loans:

  • Adult entertainment/materials
  • Drug dispensaries
  • Firearms vendors
  • Government and public administration
  • Nonprofits
  • Horoscope/Fortune telling
  • Lotteries/Casinos/Raffles/Gaming/Gambling
  • Money services business
  • Religious or civic organizations
  • Rooming and boarding houses

Pros/cons

Pros Cons
 Takes performance metrics beyond credit score into consideration  Low interest rates are rare. The company advertises a low annual interest rate of 9%, for example, but the average AIR is actually 42.5%
 Helps you improve your credit score   Lien placed on business assets to secure the loan
 Easy application process  Certain industries are restricted from borrowing

Eligibility requirements

Loan product Annual revenue Min. business credit score or personal credit score Time in business
Term loans $100,000 Personal credit score of 500 1 year
Line of credit $100,000 Personal credit score of 600 1 year

Additional eligibility factors

OnDeck places a general lien on your business assets until the loan has been paid in full, which means you could lose your business if you fall behind on your loan.

The company doesn’t use a specific asset, such as real estate or inventory, as collateral, which allows businesses that don’t have valuable collateral to apply for financing.

A personal guarantee is also required, which gives OnDeck the right to pursue your personal assets if your business fails to repay the loan, but the lender doesn’t place an actual lien on your personal assets.

Banks traditionally require collateral to secure business loans, but online lenders typically favor general liens to speed up the process. If a lender doesn’t have to assign value to any collateral, then you’re more likely to get your funding quickly. However, the lender would be able to go after all of your business assets if you fail to repay the loan, rather than just a sole asset, such as your work vehicle. Additionally, you may have trouble obtaining additional financing from another lender once a lien is placed on your business.


How to apply for OnDeck financing

The OnDeck application can be completed online or over the phone.

Documents to apply

  • Tax ID number (EIN)
  • Social Security number
  • Estimated annual gross revenue
  • Average bank balance
  • Last three months of business bank statements

Fine print

Types of loan rates differ by product. OnDeck advertises different types of interest rates on its loan products, which can make it confusing to compare rates from product to product. On the three products listed in our review, OnDeck offers a simple interest rate, an annual percentage rate (APR) and an annual interest rate.

It may be hard to know the difference between the three, so we’ll explain.

  • Simple interest. This is the total interest you would pay shown as a percentage of the amount borrowed. But simple interest excludes fees, such as the origination fee. It’s typically used on short-term loans of a year or under.
  • Annual interest rate (AIR). This is the yearly percentage you pay based on your loan amount, excluding fees.
  • Annual percentage rate (APR). This is the same as AIR, showing your interest rate in annualized terms, but it includes fees. The APR is generally considered the most holistic way of looking at the cost of borrowing money.

Fees. The loan origination fee is required each time you borrow from OnDeck, but it decreases with each new loan you take out. A line of credit requires a $20 monthly maintenance fee, but you can avoid paying it for six months if you borrow $5,000 or more within the first five days.

Your rate may be higher than the lowest rate advertised. Eligibility for the lowest interest rate is reserved for businesses with the strongest creditworthiness and cash flows, as well as businesses that have an excellent repayment history on prior OnDeck loans. For all the low rates OnDeck advertises, it also shows that the average rate secured by borrowers is often much higher (see table above).

Daily or weekly payments. Like many business lenders, OnDeck requires daily or weekly payments to pay off your loan, which are based on the amount and term length of your financing. Frequent payments are designed to eliminate the burden of a large monthly payment and should be manageable based on the information you gave the company.


Bottom line: How OnDeck stacks up

OnDeck’s broad requirements give business owners a chance to secure financing without relying heavily on credit score or collateral. OnDeck measures the overall health of your business when issuing loans and designs a daily or monthly repayment schedule that works for you. If your business falls within the company’s acceptable industries, OnDeck could be a quick, efficient way to fund your business needs.

Before you choose a lender, be sure to compare offers from at least a few companies. At the end of the day, you want the best offer — rate, repayment term and fees — that you can get. A loan marketplace like LendingTree makes this simple, because we offer a short online form that asks a few basic questions and gives you the chance to get multiple loan quotes in one place.

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