OnDeck is a small business loan lender offering business term loans and lines of credit for businesses in the U.S.
OnDeck was founded in 2006 with the mission of helping small businesses get the financing they need more efficiently online. OnDeck has facilitated more than $15 billion in funding to small businesses. The company has an A+ rating from the Better Business Bureau and almost 4,000 Trustpilot reviews, with an average of 4.7 out of 5 stars.
Small Business Loans
Small business loans help companies make long-term investments. These loans give you a lump sum payment that you pay back over the loan’s term.
OnDeck offers small business loans ranging from $5k to $250k. The lender looks at an applicant’s personal credit score, annual revenue, business experience, and whether you have a business bank account or not. You can have a loan term of up to two years.
The small business lender has a simple online application that helps business owners save time. Depending on when you submit an application, you can get approved for same-day funding. That’s much faster than traditional banks and credit unions which can take over a week to review your application and deliver funds. Businesses with urgent cash flow needs would benefit from working with a small business lender like OnDeck, which offers quick funding and competitive interest rates.
OnDeck offers excellent customer service along the way, allocating a loan advisor to review loan options with you. Having someone walk you through getting a loan can make the process less complicated.
OnDeck Line of Credit
A line of credit can help you manage your business cash flow when you need extra funds for things like purchasing inventory or paying payroll. With a line of credit, you can access funds for your business only when you need them. OnDeck offers businesses a line of credit from $6,000 up to $100,000 with a 12-month repayment term that resets after each withdrawal.
If you have a business credit card, a line of credit can still help. Business lines of credit usually have higher credit limits and give you more flexibility over how you can use the funds. OnDeck can also increase your credit limit and let you access more capital if the company likes your cash flow, net income, and payment history. If you do not have a business credit card, taking out an OnDeck line of credit can help. That’s because OnDeck lets you build your business credit score with on-time payments.
OnDeck Term Loan
If you need funding to invest in your business, such as a significant expansion or a large purchase, OnDeck can offer a business term loan. OnDeck business term loans can help you access a sum of cash at once and have the option of applying for more once you have repaid half of it. With an OnDeck term loan, you can borrow between $5,000 and up to $250,000 with repayment terms of up to two years.
OnDeck term loans have weekly payments. These more frequent payments may be inconvenient for some customers, but frequent payments are also smaller and easier to budget. It’s easier to scramble to raise funds for a payment at the end of the week compared to a payment at the end of the month. The higher frequency of payments can make each loan payment feel more feasible. OnDeck business term loans feature competitive rates that get lower if you have a high credit score. You can get a small business term loan from OnDeck with a FICO credit score as low as 625.
How Does OnDeck Work?
If you are looking to get a business term loan or a business credit line with OnDeck, you will need to meet some requirements:
- Your business has to be at least one year old.
- Your personal FICO Score needs to be at least 625.
- Your annual business revenue must be $100,000 or more.
- You must hold a business bank account.
If you meet all these requirements, you can easily complete the process online in three easy steps:
- Complete a simple online application on OnDeck’s website.
- Review your loan options with an OnDeck loan advisor.
- Receive your funds on the same day after completing the checkout process.
Consumers with any questions can contact customer support via email or phone. Representatives will take your call on weekdays from 9:30 am to 7:30 pm EST.
Other Requirements
OnDeck can be a good option for many business owners who fulfill the criteria, but you should also be aware of additional requirements. OnDeck does not do business with all 50 U.S. states. Businesses located in Nevada, North Dakota, and South Dakota are not eligible for an OnDeck business loan. OnDeck does have divisions for businesses in Canada and Australia. The company also doesn’t work with every industry. OnDeck has published a “Restricted Industries and Businesses” list on its website. If your industry is included on this list, you will have to seek another small business lender.
If you still qualify for a loan after these requirements, you can submit a loan application to see how much you can get.
SMART Box Comparison Tool
You will receive several loan offers, but which one is the best choice for your small business? OnDeck created a transparent tool known as SMART Box Comparison. This resource gives borrowers a snapshot of each loan’s terms, interest rates, and other details for the evaluation process. SMART stands for Straightforward Metrics Around Rate and Total Cost and indicates the true cost of borrowing money.
Building Your Credit Score with OnDeck
Each time you make a loan payment or trim your business line of credit, your credit score goes up. These actions strengthen your payment history, a critical component of your score. However, OnDeck takes a different approach to helping clients build credit.
Even though OnDeck uses your personal FICO score for the calculation process, the lender reports your payment history to the business credit bureaus. When you pay OnDeck loans on time, your business credit score will increase, and your personal FICO score will not get affected.
Improving your business credit score can make you eligible for more business loans in the future. Some lenders only look t your business credit score and treat your personal finances as secondary. OnDeck gives business owners the opportunity to use their personal credit score—something more business owners have—and then use their payments to build business credit. Late payments will not show up on your personal credit score, but they will impact your business credit. You also have to provide a personal guarantee for an OnDeck loan, so your personal finances are still in play. It is a common practice for small business lenders to ask for a personal guarantee when giving out capital.
Should You Get a Business Term Loan or Line of Credit from OnDeck?
OnDeck offers business lines of credit and business term loans, but each of these financial products has strengths and weaknesses. It’s possible to get both financial products at the same time, but some people only need capital from one of these loans. It’s important to know the differences between a business term loan and a line of credit before applying for an OnDeck loan.
A small business term loan covers long-term investments. These loans have fixed monthly payments because of a fixed interest rate. Some of these loans have variable interest rates, which fluctuate based on market conditions. Fixed interest rates provide more stability, while variable-rate loans result in fluctuating monthly payments that often start out as lower than fixed-rate loans.
If you need as much money as possible, small business term loans are the better choice. OnDeck has a $250,000 cap on how much you can borrow with a business term loan compared to a $100,000 limit for business credit lines. Most small business term loans also have fixed interest rates, while most business lines of credit have variable interest rates.
However, a business line of credit can serve business owners. Credit lines only accrue interest when you borrow against the credit limit. If you take out a small business term loan, you will pay interest even if you do not use the loan’s capital. You can take out a business line of credit as a “just in case” funding source. A business owner can hold onto a credit line and not use it until they have short-term cash flow issues, such as a slow season. Business lines of credit are more suitable for low-priced investments than small business term loans.
The Advantages of OnDeck
OnDeck provides several advantages for small business owners who need extra cash.
- Small business owners can get same-day funding: It can take over a week to get a small business loan from a financial institution. OnDeck trims the amount of time it takes to get a loan and provides same-day funding, depending on when you apply for a loan.
- High loan amounts: Small business owners can access up to $250,000 in capital through a business term loan. OnDeck looks at your annual revenue, personal credit score, business experience, and other details when determining how much you can borrow.
- No business credit score requirement: Some small business lenders will not consider your FICO score or personal assets when reviewing your loan application. These companies will only focus on your business assets and business credit score. OnDeck only looks at your personal credit score, a number that more business owners have.
- Build your business credit score: OnDeck reports your loan payments to the business credit bureaus. This reporting lets you build your business credit score, which can help you qualify for more financing in the future.
- Get extra funding if you need it: OnDeck increases credit limits for borrowers who pay on time and have good financials. The small business lender also lets you replenish your small business loan halfway through if you need extra funding and have a good payment history.
What to Keep in Mind Before Using OnDeck
OnDeck has helped companies in over 700 industries access over $15 billion in capital. However, no lender is perfect. You should keep these details in mind when considering OnDeck.
- You need a good credit score to get an OnDeck loan: Some lenders have lower credit score requirements than OnDeck. You need a 625 FICO score to get a loan from OnDeck, but other lenders set the minimum requirement to 600. It’s also possible to get a loan with bad credit from another lender, but that usually results in a higher interest rate.
- OnDeck isn’t for early-stage startups: If your business is an idea on paper, or you haven’t made revenue and need to get started, OnDeck isn’t for you. The company has an annual revenue requirement of $100,000. If your business does not make over $100,000 per year, you won’t get a business loan or line of credit from OnDeck. Other lenders have financial products available for smaller businesses and people who want to get their ideas off the ground. However, those types of loans may have higher interest rates.
- Short loan terms result in higher monthly payments: OnDeck has a maximum loan term of two years. That means the payments only get spread across 24 months. You may get a loan with a 5-10 year term if you look for another lender. The shorter loan term from OnDeck does help you get out of debt faster, but you may want to shop around for a 5-10 year loan if cash flow is tight.
- OnDeck loan repayments occur weekly: Some OnDeck clients like that they pay back the loan weekly instead of monthly. Weekly payments are more manageable than large monthly payments, which can feel like a surprise for some business owners. The weekly repayment schedule isn’t for everyone, and it is something to keep in mind before getting an OnDeckloan.
- OnDeck has some restrictions: The company does not do business with businesses in Nevada, North Dakota, or South Dakota. OnDeck also has a list that shows which industries it does not work with. You cannot get an OnDeckloan if you are in one of the restricted industries or states. If these restrictions do not affect your business, you do not have to keep them in mind. However, it is a good idea to check before going deep into the loan application process.
