OnDeck Small Business Loans Review

Pros and cons.

Pros

• Best online closing experience
• Fast funding
• Good for businesses with lower credit scores
• Can help build your credit if you make on-time payments

Cons

• Potentially high interest rates
• Daily or weekly payments
• Not available in North Dakota

Compare to other lenders.

OnDeck Short-Term Loan

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Max loan amount $250,000

Min. credit score 625

ClickLease – Equipment Financing

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Max loan amount $20,000

Min. credit score 520

Loan offerings through OnDeck.

OnDeck tailors its loan offerings to suit a wide range of business needs, ensuring that small and medium-sized enterprises find the right type of financing. The primary products OnDeck offers are short-term loans and lines of credit.

Short-Term loans provide a specific amount of credit to be repaid over a set period. These loans are ideal for businesses looking to make a one-time purchase or investment, such as buying equipment or funding an expansion project.

Lines of credit are suitable for businesses seeking ongoing access to funds, offering a credit line up to $100,000. This flexible financing solution allows businesses to draw from their line of credit as needed, paying interest only on the amount borrowed. It’s an excellent option for managing cash flow fluctuations or unexpected expenses.

Both financing products are designed with the small business owner in mind, featuring fast application and funding processes.

Business short-term loan.

Business line of credit.

See if your business is eligible
for financing through Lendio.

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Things to consider.

Fast funding

One of the standout features of OnDeck is their incredibly quick turnaround time for funding. For small business owners in need of rapid financing, this can be a game-changer. Once your application is approved, funds can be available as soon as the same day, allowing businesses to react quickly to opportunities or financial necessities. This swift access to capital makes OnDeck particularly attractive for those situations where time-sensitive investments or emergency expenses arise.

Low minimum credit score requirement.

OnDeck’s inclusive approach extends to its lenient minimum credit score requirement, setting the threshold at 625. This opens up avenues for business owners who might not qualify for traditional bank loans due to their credit history.

Potentially high interest rates.

While OnDeck provides an accessible financing option for many businesses, it’s important to note that this accessibility can come at a cost. The interest rates for OnDeck loans are often higher than those found with traditional lenders, particularly for borrowers with lower credit scores or less business history. This means that while OnDeck can be a lifeline for funding, the overall financing costs can be significant over the life of the loan.

Prospective borrowers should carefully compare OnDeck’s rates with other financing options to ensure they’re choosing the most cost-effective solution for their needs. This comparison should include not just the interest rates but also any additional fees or costs associated with the loan, to understand the total financial commitment they are making.

Can build credit.

Being diligent with your loan repayments to OnDeck can have the added benefit of bolstering your business credit profile. On-time payments are reported to business credit bureaus, which can help improve your business’s credit score. This enhancement in your credit standing opens up new doors for future financing endeavors, potentially qualifying your business for loans with more favorable terms. 

Daily or weekly payments for short-term loans.

OnDeck’s repayment structure for short-term loans requires businesses to make daily or weekly payments. This setup can be a double-edged sword. On one hand, it helps businesses stay on top of their debt by spreading the repayment over more manageable, smaller increments, reducing the financial strain of a monthly lump sum. On the other hand, it necessitates steady cash flow to meet the frequent repayment schedule, which may pose a challenge for businesses experiencing variable income. It’s crucial for prospective borrowers to assess their cash flow patterns and ensure they can comfortably meet OnDeck’s repayment terms.

Not available in all states.

Unfortunately, OnDeck does not offer its services in all 50 states. Currently, businesses located in North Dakota cannot access OnDeck’s financing solutions. Business owners elsewhere in the U.S. can readily take advantage of OnDeck’s offerings, provided they meet the application criteria. 

Excellent third-party customer reviews.

OnDeck has an A+ rating with the Better Business Bureau and averages at 4.6 out of 5 stars on Trustpilot. 96% of customers gave OnDeck a 5-star rating, with many reviewers highlighting OnDeck’s great customer service and painless processing experience.

Evaluation

OnDeck is best for:

• Businesses needing quick cash. Perfect for those who need funding promptly to take advantage of a timely opportunity or to cover unexpected expenses.
• Owners with less-than-perfect credit. With a minimum credit score requirement of 625, OnDeck is accessible for many business owners who might not qualify for traditional bank loans.
• Businesses interested in building credit. Making on-time payments on an OnDeck loan can help improve your business credit profile, potentially leading to better loan terms in the future.
• Companies seeking flexible financing solutions. Whether it’s a short-term loan for a one-off purchase or a line of credit for ongoing needs, OnDeck offers a range of products to meet different business demands.

Where OnDeck might fall short:

• Higher costs. Despite the accessibility and flexibility of OnDeck’s financing solutions, some businesses might find the cost of borrowing, including higher interest rates and fees, to be a significant factor, especially for long-term financing needs.
• Frequent repayment schedule. The requirement for daily or weekly repayments can be a financial strain for businesses with inconsistent cash flow. 
• Limited to smaller loan amounts. Businesses in need of financing beyond OnDeck’s maximum offering might need to look elsewhere. 
• Shorter term lengths for some products. The relatively shorter maximum term lengths might not be ideal for businesses looking for longer-term financing solutions.

How to apply for financing from OnDeck through Lendio.

Applying for financing through OnDeck via Lendio is a streamlined process designed to connect your business with the funding it needs with minimal hassle. Lendio is a small business loan marketplace with multiple lenders that will help match small businesses with loans that suit their unique needs. Here’s how you can get started:

1. Complete Lendio’s online application form: You will need to fill out a brief online application on Lendio’s website. The form asks for basic information about your business, such as its name, how long it’s been in operation, your monthly revenue, and the amount you’re looking to borrow.
2. Documentation submission: Alongside your application, you will be asked to submit documents that verify your business’s financial standing. These could include recent bank statements, income statements, balance sheets, and tax returns. Having these documents ready in advance can speed up the process.
3. Review and acceptance: Once your application is submitted, Lendio will match you with potential lenders that fit your needs. If OnDeck is a good fit for your financing requirements, you will receive an offer outlining the terms of the loan. Review these terms carefully to ensure they align with your business goals and repayment capabilities.
4. Finalize the deal: If you decide to proceed with OnDeck, you will work directly with their team to finalize the loan details. This may involve additional verification steps or documents.

The bottom line.

By offering a spectrum of loan products tailored to meet diverse needs, OnDeck stands out for its rapid funding, inclusive credit requirements, and the opportunity it provides for businesses to build credit. However, the potential higher costs and tight repayment schedules underscore the importance of evaluating one’s financial health and business model compatibility with OnDeck’s offerings.

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