By Daniel Lewis,
/ Advertising Disclosure

4.7 / 5
TOTAL SCORE
SUMMARY

OnDeck is a perfect option for businesses that want a substantial term loan but do not want to go through a stressful loan application process. It is best suited for established small businesses over three years old and having high annual revenue. OnDeck is not for high-growth startups or for a small business that is just beginning.

DETAILED RATING
Loan Features
Application Process
Fees, Rates, and Penalties
Customer Service
POSITIVES
  • Easy Application Process
  • Transparent Terms and Conditions
  • Excellent Customer Service
  • Repayment Helps Build Business Credit
  • Fast Funding Once Approved
NEGATIVES
  • High-Interest rates
  • Not all businesses and states are supported

OnDeck is one of the leading platforms when it comes to online lending – they are the most well known and have a stellar reputation. OnDeck was founded in 2006 by entrepreneur Mitch Jacobs. It is headquartered in New York City but has offices throughout the USA and in Sydney, Montreal, and Toronto.

OnDeck is now owned by Enova, another FinTech financial service. OnDeck provides a fully automated loan service to small businesses. Its mains offerings are term loans and business lines of credit. Customers can use the streamlined OnDeck application process without having to go for a physical interview in person. The lender has facilitated over $13 Billion in loans globally.

OnDeck is one of the first automated online lenders and still maintains a strong position as one of the best. It partnered with Intuit QuickBooks, Angie’s List, Prosper Marketplace, Credit Karma, WEX, and Wave Accounting, to create the Innovative Lending Platform Association (‘ILPA’), responsible for launching the ‘Smart Box’ lending feature, now an industry standard.

The Smart Box clearly displays the rates consumers will need to play for a loan. This can strengthen the decision-making power of small business enterprises. Transparency is a vitally important factor in the loan industry, and OnDeck played a significant role in making the area more transparent.

Editor’s Note: OnDeck is one of the most highly regarded online loan providers. Customer service is flawless and all fees are clearly displayed using the SmartBox model. While the qualifying criteria are a little higher than other online loan providers, this is the number one choice for those that can meet its eligibility criteria.

Highlights

requirments_icon1Loan Amount
$5,000 – $250,000

Terms
Up to 12 – 24 months

Funds received
24 hours

Good for
Bad for
Businesses that have been in operation for longer than three years New Businesses and startups
Businesses with over $100,000 in annual revenue Businesses looking for alternative funds to the Line of Credit and Term Loan
Businesses looking for a fast, no-hassle loan
Businesses looking to get expert advice from a qualified loan advisor

Ondeck Website

Only takes 5 minutes and doesn’t impact your credit score

OnDeck Advantages

OnDeck is one of the most transparent online lenders in the market. Clients will know exactly what they qualify for, what the interest rate is, and what the fees are for late payment before getting the loan. The lender is built around transparency. They also report credit payments to the appropriate bureaus so you can build your business credit rating fast by paying your dues on time (not all online lenders do this).

OnDeck offers a good maximum term loan, going from $5,000 to $250,000. They also offer a line of credit loan from $6,000 to at $100,000. As one of the most trustworthy lenders in the market, there is nothing to worry about regarding extra fees or hidden charges. Once you qualify, you can rely on OnDeck to carry out their end of the bargain.

Another benefit of using OnDeck is the smooth application process. After filling out a short questionnaire, an OnDeck representative will reach out to discuss your available loan options. After this, the money can be in your account within one business day. The application process itself only takes 10 minutes to complete and the time taken from the application to funding is usually less than a week.

Of all the OnDeck advantages, the biggest would have to be its fantastic customer service team. The lender has outstanding online reviews mainly due to the quality of care exhibited by the representatives. You will be guided through each step of the process and if anything crops up, you can ask for a change or modification. Needless to say, this is not a common phenomenon within the online lending industry.

Get a Business Loan With OnDeck Within 24h!

OnDeck Disadvantages

The obvious trade-off with an online application process and one-day financing is that the rates will be steep. This is inevitable and something that each small business is going to need to evaluate personally. The weighted average APR for OnDeck term loans is 49.06%, while the weighted average for lines of credit is 35.2% 

The figures are gathered from the last quarter of 2019 and such rates are very high. However, for businesses with stronger fundamentals, the rates can go as low as ~10% for both lines of credit and term loans. On a more positive note, OnDeck is one of the few lenders that actually discloses the weighted average, while others advertise lower range figures.

OnDeck is more stringent in terms of eligibility requirements. Businesses will need to have more capital, a longer inception timeline, and a higher credit rating to qualify. However, it’s still better than banks in this regard, which often don’t work with businesses with a credit score lower than 720.

Loan Features

OnDeck offers two loans – the term loan and the line of credit. The term loan is a lump sum paid upfront with fixed repayment terms. The line of credit is financed on demand. It can be drawn upon and repaid as needed. Generally, the term loan is used for a specific purpose or as a working capital loan. The line of credit is more often used by seasonal businesses with irregular cash flow or for a business that wants extra capital for smaller expenses, just in case of a liquidity trap.

Loan Features

It’s important to understand that the OnDeck loan repayment is deducted from your balance daily or weekly, not monthly. So make sure you have some capital in your account every day (or week) to pay off this deduction. Alternatively, you will incur a late payment penalty. The line of credit is weekly; the term loan is either daily or weekly (depending on your circumstances).

Loan Type Term Loan Line of Credit
APR Average 49% 35%
Amount Range $5,000 – $250,000 $5,000 – $100,000
Term Length Up to 24 Months 12 Months
Funding Time 24 Hours 24 Hours

Additional Features

OnDeck is a simple provider that focuses on generating loans to reliable applicants. The main ‘feature’ is their customer-centric system. However, additional features include:

  • Easy Access – customers can use the phone, email, live chat, Facebook, or Twitter to resolve any issues.
  • Smart Box – The Smart Box allows customers to see exactly how much they will be paying and lets them compare loans against one another without confusing terminology.
  • Loyalty Benefits – People who renew their loans with OnDeck get a loyalty bonus. The entire interest remaining on a current loan is waived for returning customers. 80% of customers return to OnDeck for the second round of financing.

Fees, Rates, and Penalties

As previously mentioned, the rates for OnDeck tend to be relatively high in terms of the APR. But the rates are transparent at the start; nothing will creep up on you later. In addition, OnDeck has no prepayment penalties (a rarity in the market), meaning people can pay off their term loans quickly. Still, there is little benefit in doing this, as the total repayments are fixed.

The origination fees for OnDeck terms loans are between 0% – 5% on your first loan. This fee drops to 1% – 3% for the second loan and 0% – 3% for the third loan. The maintenance fee for the line of credit is $20, which gets waived for the first six months if you withdraw $5,000 or more from your business line of credit loan within the first week of opening your line.

Loan Type Term Loan Line of Credit
Origination Fees 0% – 5% No
Prepayment Fees No No
Late Payment Fees Yes Yes
Maintenance Fees No $20
Interest Rate Range 12% – 99% 11% – 99%

Get an SBA Loan with OnDeck

Estimated APR

OnDeck offers term loan rates as low as 11.89% APR and Line of Credit rates as low as 10.99% APR. However, also on the OnDeck page is written:

Eligibility for the lowest rates is very limited, available only to businesses with the strongest creditworthiness and cash flows, and typically businesses that have shown an excellent payment history on prior loan products with OnDeck. The average rate for term loans is 54.96% APR and the average rate for lines of credit is 47.14% APR. Averages are based on loans originated in the quarter ending March 31, 2021.

The APR is the all-inclusive figure that denotes total fees and what you will pay. But OnDeck charges a 0 – 5% origination fee. The difference is that this is taken from your total rate, so a 2% origination fee would result in a 2% reduction in your total loan amount.

Without this origination fee, you would receive the full amount and pay the interest back over the lifetime of the loan. The APR is the same, but the way the amount is paid back is different. Try to understand this difference before you take out the loan, as it will assist you down the line. Some lenders can be tricky in representing the total loan repayment percentage.

OnDeck Eligibility Requirements

OnDeck eligibility requirements are a little higher compared to other online lending platforms. The minimum FICO credit score is 600, while other providers frequently accepting credit scores as low as 550 or have no minimum at all. The annual revenue is a lot more than the accepted standard of $100,000. And the time in business is most often 12 months, and the qualifying terms are the same for a term loan and a line of credit.

OnDeck Eligibility Requirements

In addition to the eligibility requirements listed below, applicants will need to have a business checking bank account, be located in the USA (unless applying in Australia or Canada), and be in a relevant industry. Loans to specific industries, such as munitions, gambling, entertainment, credit lending, etc, are not allowed with OnDeck. A personal guarantee is required, and you cannot have had any recent bankruptcy (within the last two years). Should you fail to repay your loan, OnDeck can go after your personal assets, and such behavior will also damage your personal credit score.

Criteria Term Loan Line of Credit
Minimum Credit Score 600 600
Minimum Annual Revenue $100,000 $100,000
Minimum Time in Business 12 Months 12 Months
Read our comparison: OnDeck vs. Kabbage to understand which lender is better for your business.

The OnDeck Application Process

The OnDeck application process is very streamlined. You fill in some basic details online, and a representative will get back to you within one business day. However, it is not 100% automated like many other online lenders. With OnDeck, you have to wait for a reply and talk to a dedicated loan advisor. With other lenders, you simply connect your account details to a software platform, the platform analyzes your data and the funds are automatically delivered to your account.

However, this is not precisely a ‘flaw.’ It is a nice touch as the customer service agents and the loan advisors are professional and customer-orientated. It establishes a good relationship and improves the user experience.

To start an application process, all you need is three months of recent bank statements, along with the basic details (business tax ID, social security number, driving license number, etc).  That’s it. A representative will be with you within a day or two and you can get funded quickly after that. Sometimes you may be required to supply additional documentation but this is the exception, not the rule.

What Happens After The Application?

What happens after application often depends on what product you ‘ordered’ with OnDeck – the Line of Credit (‘LOC’) or the term loan. Unlike Kabbage and other fully automated lenders, OnDeck requires you to talk to a customer representative for a successful application. 

After submitting the necessary documentation and filling out the online form, OnDeck will conduct a soft credit check that will not affect your credit score. You can get an offer on the same day that you apply. OnDeck uses the SMART model, which will transparently display your interest rate.

Once you accept the terms and conditions, your loan begins: funds can be in your account within 24 hours. Once the loan is repaid more than 50%, it is eligible for renewal/extension. With OnDeck, you get a dedicated representative to answer any questions you might have.

Get a Business Loan With OnDeck Within 24h!

OnDeck Transparency

OnDeck has an A+ rating with the Better Business Bureau (‘BBB’)’), as it is one of the most transparent lenders in the market. It had a hand in developing the now industry-standard Smart Box model, which empowers small businesses and lets them compare loans side by side. All fees are displayed upfront using the Smart Box model, and there are no hidden charges with OnDeck.

OnDeck goes a step further in terms of transparency. They educate the lender in terms of what questions to ask before accepting a loan. The five recommended questions are:

  1. What is the Total Cost of Capital?
  2. What is the Total Annual Percentage Rate?
  3. What is the Average Monthly Obligation?
  4. What is the total amount of Interest Paid per Dollar?
  5. Are there any Prepayment Penalties?

Regulatory and Legal Status

As of 2020, OnDeck is owned by Enova (NYSE: ENVA). Since being bought by Enova, the service underwent some changes, with a new CEO, Cameron Poolman, and a new strategy in place.

The bank used by OnDeck to generate the loan is Celtic Bank, registered in Utah, used for US loans (a different bank will likely be used in Canada and Australia). All deposits are insured by the Federal Deposit Insurance Corporation (‘FDIC’) up to $250,000.

Customer Service

Few online lenders compare when it comes to customer service. OnDeck really stresses customer service and treating customers well. It is why 80% of customers return to OnDeck.  

Customers have one representative for the lifetime of the loan, instead of switching around between different people in a department. The OnDeck representatives are also very active on Facebook and Twitter to resolve queries or answer questions.

Forbes ranked OnDeck as one of America’s most promising companies in 2014 and it has been featured in Crain’s New York Business Fast 50 in 2013, 2014, 2015, and 2016. Its customer service has played a massive part in its success, along with its transparent pricing model. Still, after the Covid-19 hit, OnDeck’s strategy did not pan out as expected, and the company was faced with significant losses.

Get a Business Loan With OnDeck Within 24h!

Who Is OnDeck Not Suited For?

Ondeck is not suitable for businesses that are just starting out, as the qualifying requirements are relatively high. OnDeck has raised its minimum eligibility criteria slightly, but not as much that no one can qualify. Still, it is unlikely for young small businesses and startups to have a credit score above 600 and an annual revenue above $100,000.

OnDeck is mainly suited to small to medium-sized businesses that already have a history and a good record, as they want to see some financial history before taking you on. Once you are in, your business will be well taken care of, as Ondeck has exceptional customer service.

Average Borrowers With OnDeck

According to the OnDeck main page; the qualifying terms are:

  • Has been in business for 1 year
  • Has a business annual gross revenue of $100,000+
  • Has a personal FICO score of 600+

However, the most common qualifications an OnDeck borrower has are:

  • A personal FICO score between 680 to 720
  • Annual gross revenue of over $500,000
  • Time in business from four to six years

Generally, OnDeck offers applicants a loan figure equal to 10% of the total annual revenue. So the more you earn, the more you can take out as a loan.

Positive Reviews

OnDeck is rated 4.9 out of 5 stars on TrustPilot, which is an impressive feat given its size. It has over 2,900 independent reviews on the site, 95% of which are ‘Excellent.’

The fact that two of the biggest customer review sites are saying the same thing, at scale,  indicates a high-quality lending platform. The reviews themselves are very similar. Other review sites also echo these sentiments. The most positive reviews on Trustpilot and Lending Tree are related to:

  • Customer Service – By far, the most common praise of OnDeck is for its superb customer service representatives and their willingness to respond to client issues promptly and professionally.
  • Upfront and Honest – OnDeck is not looking to simply hook more clients. They have transparent rates and do not ‘push’ to make a sale. All questions are answered by the representatives and displayed at the outset of the loan.
  • Easy Application Process – Most applications are processed quickly, responded to within 24 hours, and funded 24 hours after that. The few issues that do crop up are dealt with professionally by the OnDeck team.

Get an SBA Loan with OnDeck

Negative Reviews

There are astonishingly few negative reviews with OnDeck. With COVID-19 having an adverse effect on small businesses, the reviews indicate that OnDeck is very flexible in terms of adjustments to enterprises under pressure. The only item to keep in mind is that the rates are steep and that the eligibility requirements are high.

How is OnDeck Helping Customers Amidst COVID- 19?

Like many online lending platforms, OnDeck has advice and resources concerning running a business during COVID -19. They have also completed surveys and done their own research, with the resources listed on the official OnDeck website.

But what have they done about loan offerings and the servicing of existing debt? Every business will have jargon about how they are helping out during the crisis, but we need to investigate what they are doing under the hood.

On Trustpilot, OnDeck is still excellently rated (4.9 stars out of over 2,900 reviews) with many recent positive statements, especially on its customer service.

It does not mean they are forgiving debt arbitrarily. Many customers expect that their loans should be forgiven, which is not actually mandatory, nor is it something a private company would do.

OnDeck provided the Paycheck Protection Program (‘PPP’ ) when it was available. People had the option to apply for both a typical online loan and an SBA PPP loan through OnDeck option was there to apply for both a typical online loan and an SBA PPP loan through OnDeck.

All in all, OnDeck has done an excellent job to help out businesses during the COVID 19 situation, and the online reviews reflect this quite accurately.

Why OnDeck Beats Banks

With OnDeck, you can either call a representative or just apply online. You have a lot of flexibility regarding of how you can access the service – no need for an actual visit to the branch, though OnDeck is not purely an automated service.

It also beats banks based on the minimum qualification criteria. Imagine getting all the documentation for an SBA(7)(a) and waiting 30 days for an application that is denied!

The difference with OnDeck is that you get an expert loan advisor. Now, many services indicate that you get your personalized adviser, but this is usually just a token gesture. With OnDeck, you get a person you can actually speak to and ask for loan advice.  

OnDeck Summary

OnDeck is the perfect lender in most respects. The only real disadvantages are that you need to have strong fundamentals to qualify, and the rate is a little steep. While the qualifying conditions are much lower, you should consider that the typical OnDeck borrower will have $500,000 annual revenue, a 700 credit score, and about five years in business.

But for businesses that qualify, OnDeck is one of the most flexible, transparent, and customer-friendly lending platforms available.

FAQ: Most Popular Questions Related to OnDeck

How Does OnDeck Work?

Ondeck uses both automation software and personal interaction to facilitate loans. They are a direct lending platform, where applicants fill out the online form with basic information, get in touch with a representative, and typically get funded within a couple of business days.

What Kind of Payments Will I Have With OnDeck?

Payments are made either daily or weekly. It has implications for credit reporting but could work out to either your advantage or disadvantage. Just make sure you have enough capital to make these frequent payments.

Who is the Competitor of OnDeck?

All online lenders are competitors of OnDeck, with Kabbage and LoanBuilder being arguably the most direct competitors. Still, each lender has its own niche. OnDeck has higher minimum qualifications and deals with more creditworthy businesses that are more reliable in terms of repayments.

Where is OnDeck Based?

OnDeck operates in New York, where it is headquartered. But it also operates in Toronto and Montreal in Canada and opened its doors to small businesses in Australia in 2016. Its Australian office is in Sydney.

How to Qualify for an OnDeck Loan?

You need to be in business for at least one year, have a minimum of 600 credit score, have no bankruptcies in the past two years, and have annual revenue of $100,000 or higher.

How Long Does it Take to Get an OnDeck Loan Decision?

The loan decision typically takes less than a day after talking to the OnDeck loan advisor. While it is a little longer than a purely automated process, it’s still lightning fast compared to banks and other lending institutions.

What happens if I Stop Paying OnDcck?

The worse thing you can do from a business perspective is to fail to make payments. First, your credit rating will start to drop very rapidly. Then you will also have to make the initial payment on top of the late payment penalty, as interest accrues. You have to provide a personal guarantee for the loan, meaning that your personal property is at stake if you continually fail to make payments.

Get a Business Loan With OnDeck Within 24h!

Daniel Lewis
Daniel Lewis
Daniel Lewis is an MBA accredited investment professional who wants to assist small business owners to gain access to finance. After going through many channels for funding, Lewis has found that getting the first loan right is vitally important for future success.

Leave a Review