How Does OnDeck Work?

Thanks to its streamlined application process, OnDeck has emerged as a popular source of small business loans for owners who need cash immediately. With looser credit requirements, the company also appeals to those with poor personal credit. Also, since repeat customers are rewarded with lower fees, OnDeck has built a loyal customer base.

OnDeck uses its own proprietary technology to evaluate customers and designs its own unique loans. Here are the important questions and answers:

What Does It Take to Qualify?

Your business must be at least one year old. You must have annual revenue of at least $100,000. For lines of credit, your credit score must be at least 600. For small business loans, it’s at least 500.

A personal guarantee is also required. Loans don’t need to be backed by any specific personal collateral, but OnDeck does place a blanket lien on your company’s assets.

How Does the Application Process Work?

First, you answer questions about the financing you want, specifying the desired loan or line of credit amount and purpose of the funds. Next, you provide personal info and create an OnDeck account.

After that, you supply information about your business, including:

  • Business tax ID
  • Legal entity type
  • Date of establishment
  • Average gross annual revenue
  • Average business bank account balance

After e-signing the form, OnDeck’s automated platform reviews your application. You get a decision within minutes. If approved, a loan specialist will contact you to confirm you’re qualified (have proof of revenue on hand).

What Kind of Funding Can You Get?

The company offers two forms of funding: term loans ($5,000 to $500,000) and lines of credit (up to $100,000).

Term Loans

OnDeck short-term loans range from three to 12 months; long-term loans range from 15 to 36 months. The APR for OnDeck term loans can be as low as 6% and as high as 99%. The APR you get depends on your personal credit and your company’s revenue and financial health, as well as the length and amount of the loan. Payments are made on a fixed daily or weekly basis.

By repaying early, you can save on interest costs, but not on the set origination fee. The origination fee is anywhere from 2.5% to 4% for your first loan,1.25% to 3% for your second and 0% to 3% afterwards.

Line of Credit

The OnDeck line of credit offers you borrowing flexibility, as you simply draw funds as you need them. For this revolving line of credit, you make weekly payments, along with a $20 monthly maintenance fee. Overall, the APR for OnDeck lines of credit range from 13.99% to 39.9%.

What Makes OnDeck Stand Out?

In its first decade of operations, OnDeck issued more than $5 billion in loans in the USA, Canada and Australia. OnDeck’s success proves it’s serving a crucial need.

There are five core reasons why OnDeck has attracted so many entrepreneurs:

  • Benefits for repeat customers: OnDeck rewards its good customers with lower origination fees, making borrowing cheaper.
  • Speedy funding time: Money can get to you in as few as 24 hours, which is great if you need cash now for something like payroll or inventory.
  • Seamless application: Get approved in 5-10 minutes.
  • Straightforward terms: OnDeck makes the total interest percentage, origination fee and total loan cost very clear.
  • Reasonable requirements: OnDeck has lower personal credit requirements and reasonable business qualifications, which ensures more entrepreneurs can obtain funding.

Common Reviews of OnDeck

OnDeck does quite well on major review sites. Most customers rate the company as above average or excellent overall.

On sites like TrustPilot, Credit Karma and Consumer Affairs, OnDeck gets great reviews for its easy loan process, quick funding, reasonable qualifications and variety of funding options. Many customers love that you get a lower origination fee the second time around. Also, the customer service team at OnDeck gets great feedback, especially for their responsiveness and courteousness.

On those same sites, you will run across some negative reviews. The majority are about high interest rates and fees. Since OnDeck does lend to relatively new companies and those with poor credit, it can be expensive to borrow with them. However, that’s not entirely OnDeck’s fault, especially when you consider that other lenders aren’t as willing to work with such customers.

Is OnDeck Right for You?

For those with excellent credit, OnDeck could be a source of funding, though you should compare rates with other lenders. You’ll probably find a better deal.

For those with average or poor credit, OnDeck is one of the best options for funding both daily expenses and long-term business goals. Loans can go up to 36 months, which gives you nice breathing room to use those funds to grow your business.

If cash flow is slow or fluctuates at your business, OnDeck is a smart choice, as funds get to you quickly. Also, borrowing with OnDeck does get cheaper over time, which can make them a long-term solution for any sort of business need.

To enjoy all the advantages of an OnDeck loan, know what you’re agreeing to first. Make absolutely sure you can repay the loan.

So, run the numbers for OnDeck’s offer and compare it with others. Take the financing that will maximize your dollars and enable you to build your business into a sustainable success.