OnDeck Review

Lender Overview

Loan types
Working capital loans for small businesses
Loan amount
20% of annual gross receipts, to a maximum of $250,000; $5,000 minimum
Interest rates
Weighted average rate 24.6% at simple interest, and 42.5% average interest rate (AIR), which is interest excluding origination fees
Origination fees
2.5% to 4.0% on new loans, 0 on renewals
Loan term
Fixed rate, self-amortizing loans with terms of between six months and 24 months
Funding time
In as little as 24 hours after approval
Customer services
Monday through Friday, 8:00 am to 9:00 pm; Saturday, 9:00 am to 5:00 pm, all times Eastern; can be accessed by phone or live chat
  • Quick application and funding processes
  • Easy Qualification - based on three month's credit card and bank statements
  • No tax returns or financial statements required
  • Only 50% or more owners required on the loan
  • Credit scores as low as 500
  • Provide business credit reporting
  • No Document fees
  • Soft credit pull only (will not affect your personal credit score)
  • Borrow funds for any purpose
  • No merchant interview required
  • Interest forgiveness on unpaid loan balances refinanced through renewals
  • No origination fee on loan renewals
  • No prepayment penalties
  • Interest rates can be high, with the average at 42.5%
  • Origination fees have a greater impact on shorter-term loans
  • Fairly conservative loan underwriting guidelines
  • Loan terms limited to 24 months or less
  • Daily or weekly repayments could be a problem if you have unpredictable revenues

About OnDeck

Based in New York City, OnDeck Capital is dedicated to providing working capital loans to small businesses. Since its founding in 2007, the company has made more than $8 billion in loans to more than 80,000 small businesses, in over 700 industries across the US. In fact, OnDeck is the largest online small business lender in the US. It also lends in Canada and Australia.

The company's strength is that they use cutting edge technology to evaluate businesses based on their current performance and online reputations, rather than solely on credit scores supported by endless volumes of documentation. A merchant can obtain an approval online in a matter of minutes, and have his or her loan funded in as little as 24 hours.

OnDeck is a publicly traded company (NYSE: ONDK). This is an advantage to merchant borrowers, since the company is open to public scrutiny. This is in contrast to the many privately owned business lenders that operate out of view, and are not subject to any oversight.

OnDeck Drill Down

Loan types. Primarily working capital loans. The company does offer lines of credit on a limited basis. They advertise equipment financing, but in our experience these are not available.

Credit reporting. OnDeck can help your business develop a business credit rating, by reporting your credit performance to the appropriate business credit bureaus (Dun & Bradstreet, Experian and Equifax). They don't report to personal credit bureaus, unless your loan goes into default. This will be an advantage for you personally, since the loan will not appear on your personal credit report, and impact your application for personal loans.

Online/Mobile Loan Access. You can access your loan information through the OnDeck customer portal or mobile app, 24 hours a day, seven days a week. There you can check your balance, make a payment, or find out when you're eligible to renew your loan.

Dedicated Loan Specialist. Specialists are available by phone or live chat during OnDeck's regular business hours. They can answer questions about financing options and industry challenges.

Company Reputation. OnDeck has the following ratings from the Better Business Bureau and TrustPilot:

Privacy and data security. OnDeck is a TRUSTe certified website, in which that firm has reviewed OnDeck's privacy policy and found it to be in compliance with their guidelines. It certifies that key data privacy and protection principles are being employed on the site.

OnDeck Small Business Center. Provides guides on the following topics:

  • Build a Strong Business Credit Profile
  • Understanding Crowdfunding
  • What You Need to Know About SBA Loans
  • Maximizing The Value of Financing for Retail Businesses

OnDeck Term Loan Interest Rates and Fees

OnDeck advertises term loan interest rates as low as 9.99%. However they do caution that "eligibility for the lowest rates is very limited, available only to businesses with the strongest credit worthiness and cash flows, and typically businesses that have shown an excellent payment history on prior loan products with OnDeck". More realistically, you should expect to pay an interest rate of 20% or more.

Your interest rate is determined by OnDeck's assessment of your business as well as your business and personal credit profiles.

The company charges origination fees based on the following schedule:

  • First loan, 2.5% to 4.0% of the loan amount
  • Second loan, 1.25% to 3.0% of the loan amount
  • Third loan or higher, 0% to 3% of the loan amount

OnDeck's use of AIR - average interest rate - is misleading. AIR does not reflect origination fees paid for the loan. This is unlike annual percentage rate, or APR, which gives your interest rate net of origination and other fees. When calculated as APR, your interest rate will appear higher.

Loan Repayment. You will have fixed daily or weekly payments, that are automatically deducted from your business bank account. Daily payments will be withdrawn 21 times per month (no weekends or holidays). Weekly loan payments are collected on Wednesdays. There is no prepayment penalty.

OnDeck is One of the Founding Organizations for the SMART Box

In 2016, OnDeck participated with two other small business lenders and the Association for Enterprise Opportunity (AEO) to create the SMART Box. "SMART" is the abbreviation for "Straightforward Metrics Around Rate and Total" cost. It represents the first-of-its-kind model pricing disclosure and comparison tool focused on empowering small businesses to better assess and compare finance options. This is similar to the Loan Estimate (formerly the Good Faith Estimate/Truth-in-Lending) disclosure commonly used in the mortgage industry.

The SMART Box presents small businesses with a table of standardized pricing comparison tools and explanations, including the total cost of capital (TCC) and annualized percentage rate (APR). You can learn more about the SMART Box by reading this article.

OnDeck Lines of Credit (LOC)

OnDeck may include a line of credit with your business term loan. The LOC will be part of the loan amount approved, and not an additional credit line. For example, if you are approved for $100,000 term loan, $10,000 may be allocated to the LOC, with the balance of $90,000 included under the term loan itself.

For the LOC, interest is due only on the amount of the credit line that you actually draw. It can be used to help you manage working capital, but also to take advantage of purchase opportunities, cover unexpected costs, or make purchases that are too large for a credit card.

They advertise a minimum APR of 13.99% on the LOC, but once again caution that it is only for the most preferred borrowers. You should expect to pay a higher rate.

There is a monthly maintenance fee of $20. However, this is waived for six months with a $5,000 initial draw.

The OnDeck Borrower Requirements

To qualify for a loan through OnDeck you must meet the following requirements:

  • Be in business for at least one year
  • Have a minimum of $100,000 in gross annual revenues
  • A minimum personal credit score of 500

OnDeck requires that you provide credit card and business bank statements for the most recent three months. These are used to determine your business income for loan qualification purposes.

The company also makes extensive use of online data to determine the viability of your business. They also look closely at the online presence of your business. This would include an evaluation of the social media activity surrounding your business, as well as ratings provided on online services, such as Yelp.

Loan purpose. OnDeck is particularly flexible in this regard. Loans are available for any type of working capital, including business expansion, inventory purchases, business relocation, managing receivables, and marketing campaigns.

They generally frown on the use of proceeds for "survival capital", like meeting payroll. But in our experience, no one is turned down for the loan purpose.

Types of business OnDeck services. OnDeck has made loans to businesses in more than 700 industries. However, the company does have a long list of restricted industries, that includes common financial services and investments businesses, pawnshops, telemarketers, payroll companies, attorneys, personal trainers, call centers, gun shops, travel agencies, farming and funeral services. They also don't make loans to businesses engaged in the trucking industry.

They do favor medical, dental and chiropractic practices, as well as restaurants and retailers, among other types of businesses.

Within the construction industry, OnDeck does not make loans to general contractors, but does lend to subcontractors, such as plumbers, electricians, and carpenters.

OnDeck Loan Application Process

Your loan can be approved in just a few hours, and funded in as little as 24 hours thereafter. The entire application process is completed online. In order to make application, you need to provide the following documentation:

  • Business Tax ID
  • Credit card statements for the previous three months
  • Business bank statements for the previous three months
  • Social Security number(s) for business owner(s)
  • Driver's license number and state of issue

Other important information to be aware of includes:

No merchant interview. Most business lenders will conduct a detailed merchant interview as part of the loan application process. OnDeck is a tech-based lender, and does not conduct a merchant interview. You can make application, and not be grilled for more information as part of the process.

Collateral requirement. OnDeck requires a personal guarantee from owners with greater than 50% ownership in the business. There is a general lien placed on the assets of the business, but no specific assets are pledged as collateral.

Credit considerations. OnDeck is one of the better business lending platforms if you have bad credit. But there are two ways to make application, and the level of your credit can determine which way you should go:

  • If you have good credit you may get better pricing if you make application directly through the OnDeck lending platform.
  • If you have poor credit you will get better pricing if you make application through an independent sales organization (ISO) like us.

ISOs have preferred pricing arrangements, that extend the merchants with bad credit. We may be able to get you a loan through OnDeck with better pricing than you would get if you apply directly.

Click here to take advantage of our preferred pricing offer.

OnDeck Exceptions

OnDeck loan approvals are negotiable. If you're a strong borrower, you may be able to increase either the loan amount or the loan term. For example, though the maximum loan amount is $250,000, we have seen them go as high as $300,000 for a strong borrower. Or if you are approved for an 18 month loan, you may be able to request a 24 month loan instead.

A business may also be eligible for more than one loan. For example, if you have two businesses that are functioning as two separate legal entities, you may be able to get a term loan of up to $250,000 for each business. In order to establish separate business entities, each must have its own employer ID number.

Who OnDeck Works Best For

We've identified five types of merchants for whom OnDeck can be a preferred loan source:

1. Merchants who need money in a hurry. If you need money quickly, to take advantage of a new opportunity, OnDeck could be the go-to lender. Their fast application and funding processes enable you to get cash in just a few days.

2. Merchants who prefer a simple application process. The application process is about as easy as it gets. All you need to supply are three months credit card and bank statements. There's no need to provide the usual loan application documents, like tax returns and financial statements. OnDeck may request these only if they determine that three months credit card and bank statements don't adequately support the loan amount requested.

3. Merchants who want to build business credit. Most lenders report your pay history to the credit bureaus as a personal loan. OnDeck reports your loan to the business credit bureaus. It's an opportunity to begin building a business credit profile.

4. Merchants with fair or poor credit. Many business lenders require a minimum credit score of 600, or even higher. OnDeck has a minimum requirement of only 500. The company has tightened its credit policies in recent months. As a result, a credit score in the 500s may reduce the loan-term to no more than six months.

5. Repeat borrowers. OnDeck offers discounted pricing for loan renewals. They're currently offering 0% origination on these loans. The interest forgiveness policy also makes it possible to refinance an existing loan, in which the interest remaining on that loan is forgiven as long as at least 50% of the loan is paid.

As an existing customer, all you need to qualify for a loan renewal is to supply an additional three months bank statements.

Kevin Mercadante
About Kevin Mercadante
Since 2009, Kevin Mercadante has been sharing his journey from a washed-up mortgage loan officer emerging from the Financial Meltdown as a contract/self-employed “slash worker” – accountant/blogger/freelance blog writer – on Out of Your Rut.com. He offers career strategies, from dealing with under-employment to transitioning into self-employment, and provides “Alt-retirement strategies” for the vast majority who won’t retire to the beach as millionaires. He also frequently discusses the big-picture trends that are putting the squeeze on the bottom 90%, offering work-arounds and expense cutting tips to help readers carve out more money to save in their budgets – a.k.a., breaking the “savings barrier” and transitioning from debtor to saver. He’s a regular contributor/staff writer for as many as a dozen financial blogs and websites."