If you’re a small business owner in need of financing, you may have come across OnDeck, an online lending platform that aims to provide access to funding for small businesses. With so many lenders to choose from, it can be challenging to determine which one is the right fit for your needs. In this article, we will take a closer look at OnDeck to help you make an informed decision.
Understanding OnDeck’s Offerings
It offers two primary borrowing solutions: business lines of credit and term loans. The credit line option provides businesses with the flexibility to borrow funds as needed, while the term loan option allows for a lump sum amount to be borrowed. These options can be particularly beneficial for companies that require quick access to cash.
When examining OnDeck’s website and terms and conditions, several key points stand out:
- The average annual percentage rate (APR) for term loans is 62.1%, while lines of credit have an average APR of 48.9%.
- Loan amounts ranging from $5,000 to $250,000 are available.
- Repayment terms extend up to 24 months.
- Same-day funding is only available in specific states for term loans up to $100,000.
- Eligibility criteria related to creditworthiness and loan duration apply.
- Personal guarantees are required in addition to business liens.
It’s important to note that the lender for your OnDeck small business loan may vary depending on the state in which your business operates and other factors. Some loans may be issued by members of the OnDeck family of companies, while others are issued by Celtic Bank, a Utah-Chartered Industrial Bank.
However, OnDeck does not lend to businesses in Nevada, North Dakota, or South Dakota.
Introducing OnDeck: A Brief Overview
Founded in 2006, OnDeck has established itself as a prominent online lending platform, offering short-term business loans and lines of credit to small businesses. Headquartered in New York, NY, OnDeck has garnered attention and has an A+ rating with the Better Business Bureau (BBB). Additionally, they have received an average of 121 customer reviews and have resolved 35 complaints over the past three years.
Among the range of programs, their two main products are short-term loans and lines of credit. Each option presents unique advantages for small business owners.
How Does OnDeck Work?
OnDeck streamlines the loan application process for small businesses. The entire process can be completed online or over the phone with the assistance of a loan advisor. Once you submit your application, you can expect to receive a decision within 24 hours. Upon accepting a funding option and agreeing to the repayment terms, the funds will be deposited into your account, sometimes as quickly as the same day.
It’s worth noting that your loan may be issued by a member of the OnDeck family of companies or Celtic Bank, a Utah-Chartered Industrial Bank, Member FDIC. The lender will be clearly identified in your loan agreement.
OnDeck and the Better Business Bureau
OnDeck has earned an A+ rating from the Better Business Bureau (BBB) and has maintained an average of 121 customer reviews. Over the past three years, they have resolved 35 complaints. This rating and the number of reviews can provide insights into the company’s reputation and customer satisfaction.
Qualifying for an OnDeck Loan
To qualify for an OnDeck loan, your business must meet certain minimum requirements. These requirements typically include being in operation for at least one year, having a personal FICO score of 650 or higher, generating a minimum annual revenue of $100,000, and maintaining a business bank account.
While the OnDeck loan application process is largely automated, you will have the opportunity to speak with a loan advisor who will guide you through your options and explain the loan details and repayment process. Some of the basic information required during the application process includes your Business Employer Identification Number (EIN), Social Security number (SSN), business tax ID, annual gross revenue estimate, and average business bank account balance.
In some cases, you may also need to provide copies of your business bank statements from the three months preceding your application. A loan advisor will typically reach out to you within one business day to discuss your options, terms, amounts, and repayment schedules. If you’re satisfied with the terms, you can proceed with the online checkout process.
Understanding OnDeck’s Pricing and Fees
OnDeck, like many lenders, charges an origination fee and a monthly maintenance fee in addition to interest rates. The average APR for term loans is 62.1%, while lines of credit carry an average APR of 48.9%. These rates are important to consider when assessing the affordability of the loan.
Fortunately, OnDeck does not impose prepayment penalties. This means you can pay off your loan early without incurring any additional fees. Additionally, OnDeck reports payment activity to three business credit bureaus: Experian, Equifax, and PayNet. Timely payments can help you build your business credit.
The Impact of OnDeck on Your Credit
When applying for a loan, it’s crucial to understand the potential impact on your credit score. Initially, most lenders will conduct a soft credit check to provide you with an estimate of the interest rates and loan terms you may qualify for. These soft inquiries do not affect your credit score. However, once you decide to proceed with the loan application, a hard credit inquiry will be performed to assess your credit history fully. These hard inquiries can temporarily lower your credit score.
Fortunately, OnDeck does not report your repayment history to personal credit bureaus. While it is crucial to honor your loan repayment terms, if unexpected financial difficulties arise and you are unable to meet the terms, your personal credit score will not be adversely affected. However, it’s important to note that your business credit score may be impacted.
How does OnDeck assess the creditworthiness of small businesses applying for loans?
A: It evaluates creditworthiness through a holistic approach that takes into account multiple factors. These factors include the business’s credit score, time in operation, annual revenue, average bank account balance, and the personal credit score of the business owner. By considering these variables, it aims to provide a comprehensive assessment of a business’s financial health and repayment ability.
What are the advantages of choosing a business line of credit over a term loan?
A: Opting for a business line of credit offers several advantages. Firstly, it provides businesses with flexibility, allowing them to borrow funds on an as-needed basis. Additionally, businesses only pay interest on the amount they borrow, rather than the entire credit limit. This can help optimize cash flow management and provide a safety net for unexpected expenses.
How quickly can I receive funds from OnDeck after loan approval?
A: Once your loan is approved and you accept the funding option, the speed of fund disbursement can vary. However, in certain cases, it offers same-day funding. This means that if you meet the eligibility criteria and the loan is approved early in the day, funds can be deposited into your business bank account on the same day.
What is the process for applying for an OnDeck loan?
A: Applying for an OnDeck loan is a straightforward process. You can complete the application online or over the phone with the assistance of a loan advisor. The application requires providing information about your business, such as its EIN, SSN, annual revenue estimate, and average bank account balance. Additionally, you may need to provide business bank statements from the past three months. After submission, you can expect to receive a decision within 24 hours.
Does OnDeck charge any hidden fees or penalties?
A: It is transparent about its fees and does not charge hidden fees. However, it’s important to note that they do charge an origination fee and a monthly maintenance fee. These fees, along with the interest rates, are disclosed upfront during the loan application process. On the positive side, it does not impose prepayment penalties, allowing borrowers to pay off their loans early without any additional costs.
How does OnDeck’s reporting to credit bureaus affect my business credit score?
A: OnDeck reports payment activity to three major business credit bureaus: Experian, Equifax, and PayNet. Making timely payments can positively impact your business credit score, as it demonstrates your reliability and financial responsibility. However, it’s important to note that if you default on your loan or miss payments, it can have a negative impact on your business credit score.
What options does OnDeck offer for businesses located in states where they don’t lend?
A: Although OnDeck does not lend to businesses in Nevada, North Dakota, or South Dakota, they may still provide support and resources. OnDeck offers educational materials, blog articles, and other resources that can help businesses in these states navigate their financial challenges, explore alternative funding options, and improve their financial health.
Can I use an OnDeck loan to consolidate existing business debts?
A: Yes, OnDeck loans can be used for debt consolidation purposes. If your business has multiple outstanding debts with high-interest rates, consolidating them into a single loan with OnDeck can simplify your repayment process and potentially reduce your overall interest expenses. By consolidating your debts, you can streamline your finances and focus on repaying a single loan with more favorable terms.
What happens if I encounter financial difficulties and struggle to repay my OnDeck loan?
A: OnDeck understands that unforeseen financial difficulties can arise. If you find yourself struggling to meet your loan repayment obligations, it’s crucial to contact OnDeck’s customer service team as soon as possible. They may be able to work with you to explore options such as restructuring the loan, modifying the repayment schedule, or finding alternative solutions to help you manage your financial situation effectively.
Can I use an OnDeck loan to expand my business or invest in new opportunities?
A: Absolutely! OnDeck loans can be used to fuel business growth and take advantage of new opportunities. Whether you want to expand your operations, invest in new equipment, hire additional staff, or launch a new marketing campaign, an OnDeck loan can provide the necessary funds to support your business’s growth initiatives. By securing financing through OnDeck, you can seize opportunities and propel your business forward.
Is OnDeck Legitimate or a Scam?
With over 15 years of operation, OnDeck has established itself as a legitimate lending platform. They offer financial services to businesses and have received an A+ rating from the Better Business Bureau. However, customer experiences can vary, with mixed reviews online. It is always recommended to compare multiple lenders and read customer reviews before committing to a loan, particularly if you require fast funding or do not qualify for loans elsewhere.
When considering personal and business loans, it’s essential to compare interest rates, repayment terms, and customer reviews from different lenders. Conducting thorough research can help you choose the best option for your needs, ensuring you don’t take on a loan that is beyond your means.
In the realm of online lending, OnDeck stands out as a prominent player, offering small businesses access to financing through lines of credit and term loans. Their streamlined application process, quick decision-making, and potential for same-day funding make them an attractive option for small business owners in need of fast access to capital.
While OnDeck has earned an A+ rating from the Better Business Bureau and boasts positive customer reviews, it’s essential to thoroughly evaluate their terms, interest rates, and fees to ensure they align with your business’s financial goals. Additionally, comparing multiple lenders and exploring customer feedback can provide valuable insights into the lending experience.
By considering all available options and conducting due diligence, small business owners can make informed decisions about securing financing that supports their growth and success.