OnDeck offers small businesses term loans and lines off credit. Businesses can qualify for financing up to $500,000. These two loan products provide small businesses with financing options for a variety of uses. While OnDeck can partner with most businesses, there are a few it cannot loan to, including firearm vendors, nonprofits, religious organizations, and room and boarding houses. You can view the complete list of restricted industries here.
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OnDeck is very transparent about what it offers on its website. You can get a good understanding of terms, rates and different types of loans without working with a salesperson. This is extremely valuable for small business owners who need to consider various loan options quickly.
OnDeck can also provide funding quickly. Business owners can expect to receive funding in as little as 24 hours. Other companies we reviewed provide same-day access, but this commitment to quick funding means your business can get the capital it needs without a long and drawn-out process. OnDeck has some of the most relaxed qualifications of any company we reviewed.
Rates and Terms
OnDeck provides term loans up to $500,000 and lines of credit up to $100,000. Small business owners can expect to pay at least 9% interest on the term loan. OnDeck doesn't provide an interest rate ceiling on its website. Based on our research, it's clear that the interest rate you pay is reflective of your business's financial situation. We've seen interest rates spike as high as 149% for a loan. It's not clear whether OnDeck provides these kinds of rates.
OnDeck breaks down its term loans into two types: short and long term. Short-term loans are three to 12 months. The rates are simple interest and start at 9%. A simple interest rate calculates the interest you pay as a percentage of your total loan amount. OnDeck gives an example on its website of 9% simple interest on a $10,000 loan. The total amount to be paid back, in this case, would be $10,900. Long-term loans are 15-36 months. The main difference between short- and long-term loans is that the long-term rate is an annualized interest rate. This means that interest is calculated based on the average yearly loan balance instead of on the total loan amount. This annualized interest rate doesn't include fees. When fees are included, the rate is known as the annual percentage rate (APR).
The lines of credit have a baseline interest rate of 13.99% APR, which means the rate is annualized on the average yearly loan balance, in addition to fees. This APR agreement is different from those of other companies we reviewed, like Kabbage, which provides simple interest rate options. OnDeck differs from a lot of other lenders we reviewed because of its origination fee. If you're interested in partnering with OnDeck, your origination fee will range from 2.5 to 4%. If you continue to loan with OnDeck, both your rate and fees may go down. The second loan fee will be between 1.25 and 3 %. If you take out a third loan, the fee will be 0 to 3%.
OnDeck supports daily and weekly payment plans. The company links to your bank account and automatically deducts money from your account. OnDeck's daily plan may be preferred by some businesses that can't support large monthly payments. OnDeck also allows you to pay off your loan at any time with no additional fees. You may get interest reductions.
OnDeck provides compelling rates and loan amounts, and there are other features of OnDeck that make it a good service for small businesses. It has one of the lowest credit requirements of any lender we looked at, making it an ideal option for small business owners with a rocky credit history.
When you apply to OnDeck, you'll have to provide personal and business information, like the business address, tax ID number, years in operation and what type of legal entity the business is. You'll have to provide an estimation for yearly income and average bank balance. OnDeck conducts a soft credit check to get a general idea of where your credit score is. Once your application is reviewed and if it's approved, you'll move on to the next step in the agreement process.
One unique feature OnDeck provides is access to an advisor. Throughout the application and loan process (as well as once you've secured funding), OnDeck partners you with company financial advisors so you have access to financial support.
OnDeck provides short- and long-term loans. Depending on which type of loan you opt for, terms range from three to 36 months.
OnDeck has some of the most relaxed qualifications of any lender we reviewed. To qualify for a term loan, businesses need a credit score of at least 600, $100,000 in revenue, and to have been in business for a year. (There are also a few industries OnDeck can't lend to.) For a line of credit, the qualifications are the same, except you need a credit score of at least 600. The higher credit score requirement aligns with other line of credit loan offerings from competitors.
OnDeck's loans are secured. Technically, you don't need to put up specific assets to get a loan, but the company requires a Uniform Commercial Code (UCC) filing to secure the loan. A personal guarantee, which is a legally binding financial document that says you'll pay off the loan, backs the UCC filing.
Time Until Deposit
The overall application process takes a few days. OnDeck's automated system can approve or deny an applicant within minutes of an application being submitted. If you're approved, you should expect to sign a contract within a day or two of your initial approval. Once you sign, OnDeck says it can get you the money as soon as 24 hours after the approval.
OnDeck conducts a soft inquiry to find out your credit score, so your overall credit score won't initially be affected by your loan application. In addition to checking your credit score, OnDeck requires three months' worth of bank statements. This verifies your monthly income, cements you as a business owner and proves to OnDeck that you can repay the loan. When we spoke to OnDeck, they said this was the only special documentation required to get a loan with the company. Other lenders require more advanced documentation, like tax returns, but OnDeck's easy loan process is another reason why it's an ideal service offering for small businesses.
When to Use This Type of Loan
OnDeck's term loans are ideal for both quick cash and big purchases. Because of the term flexibility, you can use OnDeck loans to cover everyday business expenses like covering payroll, investing in short-term marketing plans, purchasing inventory, paying off taxes or hiring new workers. Long-term loans from OnDeck can cover expenses like equipment, business expansions, renovations, refinancing other debts or acquiring new companies. The line of credit is also ideal for fast business purchases and can function as a quick way to draw funds when you need them.
Reputation and Customer Service
As of March 2019, OnDeck is accredited by the Better Business Bureau (BBB), earning an A+ and a four out of five stars on the site. OnDeck was one of the few companies we evaluated that addressed the negative reviews it received on the BBB's site. This is an important step in the customer service process; it means the company cares about user feedback and works to adjust its service to better meet the needs of its customers. The company scored highly on other review websites as well.
We interacted with OnDeck representatives via live chat to learn more about its service. They were helpful and provided clear answers to all of our questions. They also answered some industry-specific questions, so we left the conversation knowing more about the loan industry as a whole.
OnDeck's biggest limitation is that it only provides secured loans. While you don't have to put up specific business or personal assets as collateral, the UCC filing functions as a lien on overall business assets. This decreases your flexibility as a business owner should you run into financial hardship. There were also 28 complaints against the company on the BBB website. This isn't necessarily a major limitation, but it's something you should be aware of before partnering with this company. Despite the complaints, the company earned an A+ and four stars from the BBB.
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