OnDeck Review for 2024

OnDeck Financing Options

OnDeck financing includes both term loans and lines of credit. To qualify for either of these funding options, borrowers must meet the minimum eligibility requirements:

• At least one one year in business
• $100,000 in annual business revenue
• Business owner’s credit score of at least 600
• No bankruptcies in the past two years

Additionally, this lender requires a personal guarantee from the business owner. Although there are no specific collateral requirements, like most other online lenders, OnDeck typically files a blanket lien against the borrowing business.

Term Loans

If you need a quick capital infusion for a specific project or you’d like to spread a large purchase over multiple periods to make it easier to digest, OnDeck term loans are the way to go. Here’s a quick overview:

• Loan amount: $5,000 to $500,000
• Term length: three to 36 months
• Repayment options: daily or weekly

OnDeck doesn’t provide a full list of reasons applicants can get approved for a term loan. However, here are some of the most common purposes for financing:

• Project startup costs
• Purchasing quick-turnaround inventory at a discount
• Emergency purchases or repairs of critical equipment
• Bridging a seasonal gap in cash flow

Lines of Credit

OnDeck also offers revolving lines of credit – a type of financing that works as a safety net and lets you run your business without having to go through a new loan application process every time you need some additional funds. An OnDeck line of credit can be worth up to $100,000 and it doesn’t include any restrictions on when you can withdraw funds. Here’s a quick overview of this type of loan:

• Loan amount: $6,000 to $100,000
• Draw term length: 12 months
• Repayment options: weekly

Borrowed funds are returned to your credit line as you repay them. The total borrowing amount is recalculated each time you draw from your line of credit, and you repay a percentage of it each week.

Another good thing about OnDeck’s credit lines is that they’re not limited to a particular purpose or tied to specific collateral. Some of the most common purposes stated when applying for this type of funding include:

• Overcoming a short-term capital need
• Purchasing inventory
• Repairing equipment
• Covering recurring expenses such as payroll
• Financing a marketing campaign

OnDeck Application Process

Applying for a business loan is fast and simple. To start the process, you’ll need to fill out an online questionnaire. Completing the application takes less than 10 minutes and can be done either online or over the phone.

As soon as you’ve provided all the necessary personal and financial information, the lender will review your application and let you know whether you’re eligible for the loan. If you prequalify, a financial advisor from OnDeck will reach out in less than 24 hours to help you choose the right loan option.

Should you decide to accept the offer, the advisor will walk you through the online checkout process. After that, the money will be wired into your business checking account within a day.

What Information Do I Need to Apply?

Apart from some information about you and your business and the reason you need the loan, here’s what OnDeck may ask you to submit:

• Business tax ID
• Business bank statements for the past three months
• Your Social Security number
• Driver’s license number and state of issue

After you’ve completed your application and provided any requested documents, OnDeck will perform a soft credit pull that won’t affect your FICO score. As part of the underwriting process, the company will review your annual revenue, cash flow, and bank statements in addition to your credit history.

Bear in mind that this provider usually approves borrowers applying for loan amounts of approximately 10% of their annual revenues.

OnDeck Loan Features

OnDeck offers short- and long-term loans ranging between $5,000 and $500,000 for periods of three to 36 months. Borrowers can also opt for flexible lines of credit with loans ranging from $6,000 to $100,000 and terms of 12 months.

Given that OnDeck doesn’t take more than a single business day to approve or reject a loan application, we highly recommend giving this online lender a chance when shopping around for the best rates.

Loan Amount and APR Details

OnDeck is hardly the market’s most cost-effective option. On the bright side, large loan amounts make this provider stand out from the crowd. If you’re a small-business owner who can’t qualify for business funding provided by traditional lenders but still need a large sum of working capital, you should consider applying for one of OnDeck financial products.

Here’s an in-depth breakdown of term loan features:

• Loan amount: $5,000 to $500,000
• Total interest percentage: 0.4% to 0.42% of the borrowed amount per month
• APR: 9% to 98%
• Fees: 0% to 4% origination fee
• Loan term: three to 36 months
• Repayment options: daily or weekly

Instead of interest, OnDeck charges a fixed rate (also referred to as the total interest percentage) on term loans. The interest doesn’t compound and the amount you have to pay back is calculated only once. Depending on the borrower’s creditworthiness and loan terms, rates range from 0.4% to 0.42% of the borrowing amount per month.

Apart from the total interest percentage, fees include origination costs. Given that this is an upfront cost, the fee amount is deducted from the principal before the borrower gets the loan. For example, if you apply for a $10,000 loan with a 3% origination fee, the lender will take $300, leaving you with $9,700.

Benefits include same-day funding, which means you’ll receive your money the same day you finalize your loan application. You can also opt for a prepayment benefit, which means you’ll be forgiven 25% of the remaining interest if you repay your loan early. However, loans that offer this benefit come at higher borrowing rates.

As a repeat customer, you can get all the remaining fees on your existing loan waived if you choose to apply for a new loan (provided that you’ve already repaid at least 50% of your current loan).

Should you turn to OnDeck for your future financing needs, the company may also offer you a lower origination fee or no fee at all. According to the company's website, the customer return rate is an extraordinary 80%.

The company is also well-known for offering good deals on lines of credit. This financial product’s mechanisms are similar to those of a credit card – once you repay the balance on your line of credit, that amount is then available for reuse.

However, you should bear in mind that using this type of business funding doesn’t make sense if the costs of borrowing turn out to be higher than the return on investment.

Here’s a quick overview of OnDeck’s credit line features:

• Loan amount: $6,000 to $100,000
• APR: 13.99% to 63%
• Fees: $20 monthly maintenance fee, waived for the first six months if you draw at least $5,000 within the first five days of opening the credit line
• Loan term: 12 months
• Repayment options: Weekly

Although the lowest interest rates on lines of credit are reserved for borrowers with the highest credit scores, excellent cash flow, and strong repayment history on prior financing products from OnDeck, it’s still possible to get a good deal.

Term lengths are 12 months per draw, but unlike term loans, lines of credit do accrue interest. In other words, the sooner you pay what you owe, the more money you save. There are no origination or withdrawal costs, but the lender does charge you a $20 monthly maintenance fee.

To be exempt from this fee for the first six months, you’ll have to withdraw at least $5,000 within five days of opening the account.

All withdrawals are consolidated into one loan, so you don’t need to worry about keeping up with multiple payment schedules. Also, should you decide to pay off your loan early, you won’t face prepayment penalties.

One of the best things about this type of capital infusion is that you can draw from your line of credit anytime. Thanks to the instant funding option for transactions between $1,000 and $10,000, eligible businesses can withdraw funds from their lines of credit 24/7.

The funds are not limited to use for a specific purpose, and as you pay the loan back, they replenish and become available for reuse.

Eligible and Non-Eligible Businesses

Given that eligibility criteria include a year in business, annual revenues of $100,000, and a personal credit score of 600, it’s safe to say that OnDeck’s loan requirements are much more forgiving than those a traditional bank may impose.

OnDeck offers its financial products to businesses in more than 700 industries. However, businesses in certain fields don’t qualify for a loan from this provider. Here’s the list of restricted business types:

• Drug dispensaries
• Adult entertainment
• Firearms vendors
• Government and non-profit organizations
• Religious and civic organizations
• Public administration
• Horoscope and fortune telling
• Lotteries and gambling
• Financial services
• Rooming and boarding houses
• Used goods dealers, vehicle dealers, and auction houses

OnDeck Repayment Terms

The options to access your account include the lender’s online platform and the OnDeck app. On both of these channels, you’ll be able to see your loan repayment status, which is updated each time the lender deducts an amount from your bank account.

According to OnDeck’s repayment policy, the first payment is due the first business day after the borrower receives the loan. After that, you’ll have either daily or weekly payments. Weekly payments take place on Wednesdays only.

All payments are withdrawn from your company’s bank account automatically, so you don’t have to worry about missing a deadline. If you decide to pay off your loan early, you’ll be forgiven 25% of the remaining interest.

With lines of credit, your first payment is due the first business day after you make your first withdrawal. OnDeck then deducts fixed weekly payments automatically from your bank account. For each withdrawal that you make from your line of credit, you’ll have 12 months to repay the principal plus the interest rate.

Both of OnDeck’s financial products can be renewed once you’ve repaid 50% of your current balance. If you decide to apply for another term loan, the company will offer you a lower origination fee and even waive this fee completely after your second loan.

OnDeck reports repayment activities to business credit bureaus. While timely payments won’t affect your personal credit score, they may help build your business credit score and help you qualify for better loan offers in the future.

The Bottom Line

Considering that OnDeck is willing to lend to applicants with personal credit scores as low as 600, its products may be just what you need until you can qualify for financing at lower rates.

Although this lender’s offerings aren’t the most competitive and its eligibility requirements aren’t the most liberal on the market, discounts for loyal customers, exceptionally fast funding, and excellent user experience throughout the whole process are enough to explain why customers keep coming back to this lender.