Kabbage VS OnDeck Comparison: Which Is Better For Your Business?
We communicate online. We pay our bills and shop online. The internet isn’t just a virtual playground for our downtime, though. It’s also a critical tool for many businesses and has become the go-to source for many business owners seeking a small business loan.
Technology has made it possible for us to apply for business loans right from the office or even our own living rooms. Online business loans are funded quickly, have fewer requirements than bank loans, and are even available to borrowers with low credit scores or a short time in business.
Although online searches yield thousands of results for these alternative lenders, there are two that have emerged as frontrunners in recent years: Kabbage and OnDeck.
Before clicking the mouse to hit “send” on your next business loan application, read on to learn more about what these two alternative lenders have to offer, what to expect throughout the process, and which is the best choice to fit your business needs.
Table of Contents
Kabbage VS OnDeck: Main Differences
When it comes to Kabbage VS OnDeck, both lenders offer lines of credit, with OnDeck also offering short-term loans. Kabbage is slightly easier to qualify for, but OnDeck may be able to provide better rates.
Kabbage is an alternative online lender that provides business lines of credit. With just a little bit of personal and business information, you can get approved for a line of credit. You can draw from this line of credit as needed to pay for any business expense.
OnDeck is another online alternative lender. Like Kabbage, OnDeck also provides business lines of credit. However, this lender also offers short-term loans for small business owners.
Time in Business
$4,200 for the last 3 months
$100,000 per year
Personal Credit Score
With its lower revenue requirements and lax credit checks, Kabbage is easier to qualify for than OnDeck.
The borrower requirements for Kabbage are quite simple. All borrowers must have been in business for at least one year. To qualify, borrowers must have at least $50,000 in annual revenue or no less than $4,200 per month in revenue for the last three months.
OnDeck also has simple, straightforward minimum borrower requirements. All borrowers must have been in business for at least one year. An annual gross revenue of at least $100,000 over the last 12 months is also required. The borrower must operate a business in one of OnDeck’s 700+ approved industries. Industries that are exempt include, but are not limited to, non-profit organizations, gambling organizations, religious organizations, and firearm vendors.
OnDeck requires that all borrowers must have a personal credit score of at least 600 to qualify. The company also requires a minimum of five deposits each month to a business checking account.
It’s important to note that these requirements are minimums. According to OnDeck, the average credit score of borrowers is at least 660, while typical gross revenues are over $450,000, and most borrowers have been in business for 7 years.
Does Kabbage Check Credit?
Yes, Kabbage does, in fact, check the personal credit of all borrowers. However, it is different from other lenders in that it doesn’t put such a heavy emphasis on credit score and instead focuses on the performance of the business. You should expect it to affect the rates you’re offered, however.
Do Kabbage & OnDeck Perform Hard Or Soft Pulls On Credit?
This is where it gets interesting. Even though Kabbage deemphasizes the importance of credit in your application more than OnDeck does, Kabbage’s credit check may affect your credit rating more.
Kabbage performs a hard pull on credit during the application process. It’s important to not simultaneously apply for a bunch of loans that require a hard pull, as this can drop your credit score. Do your research to make sure this loan is right for you before submitting your application.
OnDeck performs a soft credit pull during the application process, which does not have an effect on your credit score. In some cases, if the credit file is restricted, consent for a hard pull will need to be given by the borrower.
Loan Rates & Terms
Now that you have an idea of the types of loans Kabbage and OnDeck have to offer, it’s time to talk numbers. Evaluating the rates and terms is an important step in determining the affordability and overall cost of a business loan. How do Kabbage and OnDeck stack up when it comes to rates and terms?
Up to $250,000
$5,000 – $500,000 (term loan)
$6,000 – $100,000 (line of credit)
6 or 12 months
3 - 36 months (term loan)
6 months (line of credit)
24% – 99%
9.4% – 99.7% (term loan)
11% – 63.2% (line of credit)
0% - 4% origination fee (term loan)
$20 monthly maintenance fee (line of credit)
Personal guarantee; possible blanket lien for term loans
Which Lender Offers Higher Borrowing Amounts?
It depends on whether you’re talking about lines of credit or short-term loans.
OnDeck provides the highest borrowing amount if a business owner qualifies for one of its term loans. With these loans, borrowers can be approved for up to $500,000. Kabbage does not offer a comparable term loan program.
When it comes to limits for lines of credit, though, Kabbage comes out on top. This lender offers up to $250,000 to borrowers. With OnDeck, lines of credit are available up to $100,000.
Which Lender Offers Less Expensive Loans?
For the most qualified borrowers, OnDeck offers the least expensive loan options. For term loans, the lowest annual interest rate is 9.99%. The loan also comes with a one-time origination fee that is equal to 2.5% to 4% of the loan amount. OnDeck also has loyalty benefits, which provide fee discounts to loyal customers who renew their loans.
For lines of credit, the lowest annual percentage rate through OnDeck is 13.99%. Interest is paid only for the portion of credit that is used. OnDeck has a $20 monthly management fee. However, this can be waived with an initial draw of at least $5,000.
Kabbage charges fee rates on the portion of the funds that have been used by the borrower. Fee rates range from 1.5% to 10%, with the lowest rates reserved for the most qualified borrowers. Kabbage’s APRs start around 24%, meaning you can at least potentially spend less on an OnDeck line of credit.
Your actual offer may vary, of course. Although OnDeck has more affordable loan options for the best borrowers, Kabbage may be the best choice for borrowers with low credit scores, lower annual revenues, or other challenges.
Which Lender Offers Better Repayment Terms?
OnDeck offers better repayment terms because there are more options for borrowers. For its term loans, repayment terms from 3 to 36 months are available. OnDeck’s lines of credit have repayment terms up to 12 months, and payments are made weekly.
Kabbage offers two repayment terms: 6 months and 12 months. Payments are made monthly with this loan.
Do Both Lenders Require Collateral?
OnDeck also does not require collateral. However, a blanket lien is required for all loans.
Application & Funding Process
At this point, you should have a better understanding of what Kabbage and OnDeck have to offer. Maybe you’ve even made the decision to move forward with one of the aforementioned loan products. Before you do, know what to expect during the application and funding process.
What Information Will Kabbage & OnDeck Require During The Application Process?
Basic business and personal information are required when applying for a Kabbage line of credit. This includes your legal and business name, social security number, contact information, and business tax ID. Through Kabbage’s secure platform, you’ll connect your bank account. Other accounts that document your business revenue, such as Amazon, PayPal, and eBay, can also be linked to increase your odds for approval and to qualify for a higher line of credit.
When applying for a loan through OnDeck, a minimum amount of information is needed during the application process. This includes basic personal and business information such as legal name, business name, and contact information. Additional information required may include your business tax ID, social security number, driver’s license number, and business bank statements for the last 3 months.
How Long Does The Initial Kabbage Application Take?
The initial application for a line of credit through Kabbage takes an average of 10 minutes. An approval decision can be determined just minutes after submitting the application.
How Long Does The Initial OnDeck Application Take?
You should expect to spend about 10 minutes completing the initial OnDeck application. An approval decision can be made within minutes of submitting the application, with funding available in as little as just 24 hours.
How Long Does It Take To Get Line Of Credit Draws From Kabbage & OnDeck?
OnDeck uses the traditional Automated Clearinghouse network for transferring funds. With this method, the money is available in 1 to 2 business days. For faster funding, OnDeck offers Instant Funding, which transfers funds to an eligible business debit card in just minutes.
With Kabbage, the length of time it will take to receive your money depends on the deposit account that you’ve chosen. For PayPal, funds will be available within minutes. Deposits to your business bank account take up to 3 business days to receive.
Kabbage also offers the Kabbage card, which can be used anywhere VISA is accepted. With every transaction, a 6-month loan is created with the same payment terms and fees as Kabbage’s other credit line draws.
Kabbage & OnDeck Competitors
Kabbage and OnDeck are both popular for their business loan options, but they’re not the only alternative lenders on the market. Whether Kabbage and OnDeck aren’t the right fit for you or you don’t qualify, there are other alternatives to consider.
|Lender||Products Offered||Req. Time in Business||Req. Revenue||Req. Credit Score||Next Steps|
Invoice factoring, lines of credit
$100,000 per year
Invoice financing, lines of credit
$42,000 per year
Term loans, lines of credit, contract financing
$25,000 per year
Business Credit Cards
Unsecured lines of credit
The online lending market is quite competitive, whether you’re looking for a line of credit, a short-term loan, or even more traditional term loans. If you’re intrigued by Kabbage, but either don’t qualify or want to explore similar lenders, check out our alternatives to Kabbage. Likewise, if you want something similar to OnDeck’s lending options, take a look at our OnDeck alternatives.
Which Is Best For My Small Business Loan Needs?
OnDeck and Kabbage both offer funding opportunities for business owners that are seeking extra capital. Each lender has its own benefits and drawbacks, so it’s important to carefully evaluate your options and determine which loan will yield the best return on investment and better fit the needs of your business.
Choose OnDeck When
- You need more than $250,000 — OnDeck’s term loans have limits up to $500,000
- You’d rather have a term loan than a line of credit
- You have good credit — lower interest rates for the most qualified buyers means a more affordable loan
- You want payment terms up to 36 months
Choose Kabbage When
- You have less than $100,000 in annual revenue (but a minimum of $50,000)
- You have a low personal credit score but solid business performance
- You’d rather make monthly payments instead of weekly payments on your line of credit
Comparing Kabbage VS OnDeck: The Final Verdict
As we’ve hopefully shown above, Kabbage and OnDeck have similar products but slightly different niches that they fill. OnDeck straight-up offers more product diversity and the possibility of lower rates, but if you have poor credit they may not be an option for you and your business.
When you think you’re ready to apply for a loan with one of these companies, or another, check out our guide on how to evaluate the strength of your loan application. Don’t think you need a loan or line of credit? Consider a business credit card for short-term expenses.