OnDeck Review
Pros
- Borrower qualifications are lower than with banks
- Multiple types of financing available
- Lower costs for repeat customers
- The application process is fast and easy
- Funds are disbursed quickly
- Builds business credit
Cons
- Financing isn’t available in some states.
- Not available to businesses in some industries
- Rates can be expensive
OnDeck Overview
OnDeck is a hugely prolific online small business lender. Founded in 2007, OnDeck became one of the first lenders to rely primarily on technology to make its lending decisions. With its algorithms, decisions that used to take days or weeks can now take only minutes. Currently, OnDeck offers two types of business loans: short-term loans and revolving lines of credit.
OnDeck was acquired by fintech lender Enova in 2020. Nevertheless, OnDeck’s offerings have remained largely unchanged over the years, apart from temporarily pausing its normal lending services in May 2020 to focus on PPP loans. Upon resuming its short-term loan and line of credit services in June, OnDeck lowered its maximum borrowing amounts for loans and increased its line of credit repayment term in response to COVID-19.
Many businesses will qualify for a loan from OnDeck — if you have been in business at least 12 months, make at least $100,000 annually, and have a personal credit score above 600, you have a good chance of qualifying. Those who are eligible will find that OnDeck’s loans are fast and helpful for a variety of business financing needs.
That said, OnDeck’s loans can be a bit expensive. APRs for OnDeck’s short-term loans can be as high as 98% with the average APR closer to 50%. Naturally, however, the rate offered to you will depend on the strength of your business. In addition to the cost, OnDeck loans have a maximum repayment term of 18 months, so those who need a more extended term length might want to look elsewhere.
Because OnDeck’s loans can be expensive, you may want to make some comparisons before settling on a lender. However, if you need a loan fast or don’t qualify elsewhere, it’s hard to beat OnDeck. Despite the potential drawbacks, OnDeck is transparent, customer service is easy to get in touch with, and overall, most customers report positive experiences.
Read on to learn more!
Table of Contents
Services Offered By OnDeck
OnDeck offers short-term loans up to $250,000 and lines of credit up to $100,000. So how does OnDeck work? After filling out a short online application, you’ll be prompted to supply some documentation before accepting a loan offer and receiving your loan. Repayments are via ACH (daily or weekly).
OnDeck’s short-term loans are quick and easy to apply for, and you may even be able to get your funds the same day your loan is approved. OnDeck also offers lower borrowing rates and other benefits, such as waived fees, to repeat customers.
OnDeck also offers revolving lines of credit, which are similarly fast and simple to qualify for — just fill out the application. Once you are approved, you can withdraw funds at any time, and there are no draw fees or penalties for repaying early.
OnDeck previously offered PPP loans during the first round of funding in 2020, though OnDeck is not participating in the second round of funding for 2021. OnDeck is instead referring applicants interested in PPP to its partner Lendio.
OnDeck Borrower Requirements
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: | 600 |
Business Revenue: | $100,000 per year |
Additionally, you must make at least five bank transactions per month to a business bank account, and your business cannot be in one of these restricted industries.
OnDeck currently does not lend to Nevada, North Dakota, or South Dakota.
OnDeck Interest Rates & Fees
OnDeck’s rates and terms are not as desirable as what you would get from a bank, but they are just as good — if not better than — those of other short-term lenders.
Your OnDeck loans interest rate will depend largely on your business credentials. According to OnDeck’s website, OnDeck interest rates (APR) for its short-term loans can be as low as 11.89%, but the average is 49.06%. For lines of credit, APRs can be as low as 10.99%, but the average is 35.2%.
Short-Term Loans
These are the terms and fees for OnDeck’s short-term loans:
Borrowing Amount: | $5,000-$250,000 |
Term Length: | 3-18 months |
Fixed Fee: | 0.4%-0.42% of the borrowing amount per month |
Origination Fee: | 0%-5% |
Effective APR: | As low as 11.89%; average is 49.06% Learn more about effective APRs |
Collateral: | UCC-1 blanket lien, personal guarantee |
OnDeck does not charge interest on its term loans. Instead, your repayment amount is a fixed rate, also called a total interest percentage. The amount you have to repay is only calculated once; fixed rates don’t compound like interest. For example, if you have a fixed rate of 19% of the borrowing amount and you are borrowing $50,000, you will have to repay $59,500 in total ($50,000 x 1.19 = $59,500). OnDeck’s rates range from about 0.4%-0.42% of the borrowing amount per month (according to a Q3 2019 earnings report), depending on the borrower’s term length and creditworthiness. Payments are made on a daily or weekly basis.
Aside from the fixed 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.
Note that OnDeck’s lowest rates on term loans (11.89% for the quarter ending December 31, 2019) are available only to businesses with exceptionally strong creditworthiness and cash flow as well as having a spotless payment history on prior OnDeck loans. 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 Short-Term Loans, Merchant Cash Advances, and APRs.
Additionally, for returning customers who renew with OnDeck, OnDeck offers loyalty benefits, in which it will waive all remaining fees on your existing loan if you choose to apply for a new loan (and your current loan is at least 50% paid down). OnDeck may also offer a lower or 0% origination fee for repeat customers.
Lines Of Credit
Here are the stats for OnDeck’s lines of credit:
Borrowing Amount: | $6,000-$100,000 |
Draw Term Length: | Up to 12 months |
Draw Fee: | None |
Maintenance Fee: | Typically $20 per month |
APR: | As low as 10.99%; average is 35.2% |
Collateral: | Personal guarantee |
OnDeck offers revolving lines of credit. Credit lines are a maximum of $100,000; you can draw from your line at any time. Funds replenish as you pay them back, and you repay a percentage of your total borrowed amount each week. Its credit lines are not tied to specific collateral or intended to be used for a specific purpose.
Term lengths are 12 months per draw, and you can repay early without penalty. Unlike its term loans, OnDeck’s lines of credit do accrue interest, so the sooner you repay, the more money you save. As with OnDeck’s term loans, it reserves the lowest interest rates on lines of credit for the most creditworthy borrowers that have an excellent cash flow and a strong payment history on prior financing products from OnDeck.
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.
OnDeck’s lines of credit carry the option of Instant Funding for transactions between $1K-$10K. This allows qualified businesses to withdraw funds from their LOC instantly at any time, with no added fee.
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Application Process
OnDeck has a fast and straightforward application process.
To start the process, all you have to do is fill out an application on the website. According to its FAQ, this is the information OnDeck might ask for:
- Business tax ID
- Bank statements for the previous few months
- Social Security number of the business owner(s)
- Driver’s license number and state of issue
OnDeck will 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 usually 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 — possibly even the same business day.
The Merchant Maverick Seal of Approval 🏆
OnDeck |
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After hours of in-depth research and evaluation, we can confidently recommend this brand to our readers. Get started today and see OnDeck for yourself.
The Merchant Maverick Seal of Approval 🏆
OnDeck |
---|
After hours of in-depth research and evaluation, we can confidently recommend this brand to our readers. Get started today and see OnDeck for yourself.
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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.