OnDeck Review
- Date Established
- 2007
- Location
- New York, NY
Pros
- Relaxed borrower qualifications
- Relaxed credit score requirements
- Competitive terms and fees
- Short application process
- Excellent customer support
- Prepayment discounts
Cons
- Potentially high factor rates
- Opaque advertising
Overview
OnDeck is a hugely prolific online small business lender. Founded back in 2007, OnDeck became one of the first lenders to rely primarily on technology to make their lending decisions. With their algorithms, decisions that used to take days or weeks can only take minutes. Currently, OnDeck offers two types of business loans: short term loans and revolving lines of credit.
Over the years, reception to the company has been mixed. Many analysts praise OnDeck for lending to businesses that banks won’t. On the other hand, others have accused the company of opaque advertising and sales practices, and offering a form of financing that can be expensive and difficult to repay.
Both stances have some truth. Even now, OnDeck still has some of the most lax borrower qualifications on the market (though their average customer has been in business for at least seven years, makes more than $450,000 in annual revenue, and has a FICO score of 660 and up). On the other hand, the short time to funding, the wide range of merchants who can use OnDeck, and other attributes work to drive up the price of the loans.
To put that in perspective, according to OnDeck’s 2018 Q2 report, their short-term loans typically have APRs that range from 9.4% – 99.7%, and line of credit APRs range from 11% – 63.2%. Naturally, however, the rate you’re personally offered will depend on the strength of your business.
Because OnDeck’s loans tend to be more expensive than their competitors, you may want to make some comparisons before settling on a lender. That said, if you need a fast loan or don’t qualify elsewhere, its hard to beat OnDeck. Despite the potential drawbacks, OnDeck is transparent, the customer service is easy to get in touch with, and overall most customers report positive experiences.
With all that in mind, read on for the details! Or, if you don’t think that OnDeck is for you, check out some of our favorite alternatives.
Table of Contents
Services Offered
- Short-term loans
- Lines of credit
Borrower Qualifications
Here are the minimum qualifications required to be eligible for a short-term loan or line of credit from OnDeck:
| Time in business: | 12 months |
| Credit score: | 500 |
| Revenue: | $100,000 per year |
Additionally, you must make at least 5 bank transactions per month, and your business cannot be in one of these restricted industries.
Terms & Fees
OnDeck offers short-term loans and lines of credit to eligible borrowers.
Short-Term Loans
These are the terms and fees for OnDeck’s short–term loans:
| Borrowing amount: | $5,000 – $500,000 |
| Term length: | 3 – 36 months |
| Factor rate: | x1.003 – x1.042 per month |
| Origination fee: | 0% – 4% |
| Effective APR: | 9.4% – 99.7% Learn more about effective APRs |
| Collateral: | UCC-1 blanket lien, personal guarantee |
Aside from the factor rate, the only fee OnDeck charges is an origination fee. This is taken directly out of the principal before you get the loan. So, if you have a $10,000 loan with a 2.5% origination fee, OnDeck will take $250, and you’ll get $9,750.
OnDeck does not charge interest on their term loans. Instead, your repayment amount is calculated via a factor rate, also called a total interest percentage. The amount you have to repay is only calculated once; factor rates don’t compound like interest. For example, if you have a factor rate of x1.19, and you are borrowing $50,000, you will have to repay $59,500 in total ($50,000 x 1.19 = $59,500). OnDeck’s factor rates range from about x1.003 to x1.042 per month (according to their Q2 2018 report), depending on the borrower’s term length and creditworthiness. Payments are made on a daily or weekly basis.
As reported by OnDeck’s quarterly earnings report, loans carry an effective APR between 16.7% and 99.4%. To understand how to calculate APRs on loans without interest rates, and learn about all the factors you should consider when evaluating the cost of the loan, head over to our article on short-term loans and APRs.
Lines Of Credit
Here are the stats for OnDeck’s lines of credit:
| Borrowing amount: | $6,000 – $100,000 |
| Draw term length: | 6 months |
| Draw fee: | None |
| Maintenance fee: | Typically $20 per month |
| APR range: | 11% – 63.2% |
| Collateral: | Personal guarantee |
OnDeck offers revolving lines of credit. Their credit lines are not tied to specific collateral or intended to be used for a specific purpose.
Credit lines are a maximum of $100,000; you can draw from your line at any time. Term lengths are 6 months per draw, and you can repay early without penalty. Unlike their term loans, OnDeck’s lines of credit do accrue interest, so the earlier you repay, the more money you save.
Aside from interest, OnDeck has a $20 monthly maintenance fee, but no origination or draw fees. Additionally, if you withdraw at least $5,000 within the first five days of opening an account, the company will waive your maintenance fee for the first six months.
Application Process
OnDeck has a very easy and fast application process.
To start the process, all you have to do is fill out an application on their website. According to the FAQ, this is the information they might ask for:
- Business Tax ID
- Bank statements for the previous few months
- Social Security number of business owner(s)
- Driver’s license number and state of issue
They’ll also ask for a bit of personal information about yourself, your business, and why you want the loan. While applying for a loan, you can call, email, or live chat with a loan specialist to help you through the process or answer questions.
When you’re done with the application, OnDeck will let you know if you’ve been approved or not. If you have, somebody from the company will get in touch with you to go over the details, make sure you understand the loan, and gather any additional information they might need.
All this normally takes less than 24 hours. Should you choose to accept the loan, it will be wired into your bank account within a day or two.
Bianca Crouse
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1 Comment
Responses are not provided or commissioned by the vendor or bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. It is not the vendor or bank advertiser's responsibility to ensure all posts and/or questions are answered.
Not happy with Ondeck, They did not follow their core principles. Furthermore they have betrayed trust with clients that are faithful to them and when you take advice from them, they renege on what they say they’re gonna do for you by a policy change that just happened so it leaves your Small Business out in the cold and possibly shutting down as a small business when you put your trust in Ondeck . They are not loyal to their clients And they’re not transparent and trust worthy. They would not stand by you as a small business as a client of theirs and do what’s best for your business to be successful. I am so disappointed and displeased with Ondeck!!!
This comment refers to an earlier version of this review and may be outdated.