Can Ondeck Capital Really Help Your Small Business?
(Read Time: 2-3 Minutes)
Ondeck Capital Spotlight:
• Time to Qualifying: 10 Minutes
• Loan Terms: 3 Month to 3 Years
• Line of Credit Max.: $100,000
• Term Loan Max.: $500,000
• Fully Automated Application
Visit our Ondeck reviews page to see how we scored the lender in various categories.
New York City’s Ondeck Capital is one of the fastest-growing, online lending platforms for small businesses. Since their founding in 2007, Ondeck has provided over $8 billion in funding for approximately 80,000 small businesses.
Ondeck Capital offers repeat customer benefits, reducing fees on subsequent loans.
The online lender provides small business funding via short term loans and lines of credit. Ondeck loans range in maturity from 3-month to 36 month terms.
As we showed in the Ondeck Capital spotlight section above, the online lender provides term loans up to $500,000 for qualifying borrowers. This isn’t just lip service-Ondeck recently provided a tech company in Excelsior, Minnesota a $400,000 term loan.
Annual interest rates as low as 9.99% for term loans and 13.99% APR for lines of credit.
Ondeck Capital provides short term loans and credit lines for businesses in over 700 different industries such as:
• Retail Stores
• Restaurant Loans
• Dental Practices
• Janitorial Services
• Technology Providers
• Food Service
Unfortunately, the online lender cannot help businesses in the casinos or gaming, drug dispensary, firearm or money service business.
Unlike most online lenders, Ondeck Capital is a publicly traded company. The availability of capital for lending comes from a variety of sources including the state of the financial capital markets and asset backed securities.1
Fast Business Loans
Ondeck Capital is one of the fastest funders of all the online lenders. The exception being the Amazon lending program but you must be invited and an existing retailer. Their fast funding capability is one reason they received high marks on our Ondeck reviews page.
Ondeck Capital provides a lending decision in minutes and funding within 24 hours.
Ondeck Capital Lending Criteria:
· In Business at Least One Year (minimum)
· In Business 7 years (typical Ondeck customer)
· $100,000 in Gross Annual Revenues (minimum)
· $450,000 in Gross Annual Revenues (typical)
· 500 FICO score of business owner (minimum)
· 660 FICO score of business owner (typical)
Ondeck Capital, as well as other fintechs including Fundera and Lendio, can make financing decisions in minutes. Their technology reviews the applicant’s cash flow situation and probability of repayment by reviewing the submitted financial statements.
Ondeck Capital Rates and Fees
However, there are some things about Ondeck loans that businesses should know. First, the interest rates aren’t cheap for the typical business borrower. While it’s true that rates can be as low as 9% and 9.99% on loans and lines, respectively, this is only for top credit customers and represent a
According to Ondeck’s website, as of June 30, 2018, the average weighted interest rate on a term loan is 25.3% (simple interest). This rate does not include fees, like Ondeck’s 2.5-4% origination fee.
The weighted average APR for their small business line of credit is a hefty 32.6%. As an APR, this figure does include fees. Ondeck lines of credit have a monthly maintenance fee of $20, which can be waived by making an initial $5,000 draw from the line, instead of keeping it open and unused.
Most businesses understand there is a cost for the convenience of applying online, obtaining near-immediate funding and having subpar credit profiles. Over 80,000 small businesses have accepted this tradeoff since Ondeck Capital began.
Ondeck Capital Transparency
Say what you will about the rates, Ondeck Capital is definitely transparent in their pricing. Their ‘SMARTBox Capital Comparison’ tool makes it easier to compare costs and fees with other lenders who use different jargon to reveal costs. For example, Kabbage loans are quoted with a monthly fee, not an interest rate. It’s an acronym standing for ‘straightforward metrics around rate and total cost’.
On their website, they meticulously break down how a $75,000 loan gets repaid by the borrower, and at what rates. First, they separate the total cost of capital which takes into account the loan’s interest expense and origination fee.
Next, they display the loan’s APR (Annual Percentage Rate), the most widely used comparison metric among lenders. It annualizes the total cost of capital. Ondeck’s APR numbers are high but keep in mind that this is partly because of the weekly repayment schedule for the loans. Some repayments may be on a daily schedule, as disclosed in Ondeck’s Term Loan FAQs.
Finally, Ondeck charges no fees or penalties for loan prepayments. Such payments can reduce the total amount of interest or fees due to the lender.
Check out our Ondeck reviews to see how we scored the lender in a variety of categories.
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