If your small business needs money and you can’t qualify for a traditional bank loan — or if you’d rather not spend weeks, or even months, going through the bank application process — OnDeck is among the online lenders offering an alternative. OnDeck offers small-business loans of up to $500, 000 and lines of credit of up to $100, 000.
OnDeck has funded over $4 billion in loans to businesses in 700 industries since launching in 2007. The lender works with restaurants, auto body shops, beauty salons, doctors, dentists and other small retailers — businesses with revenue of $100, 000 to $5 million, CEO Noah Breslow tells NerdWallet.
OnDeck is best for:
- Businesses that need money fast for expansion, working capital or short-term expenses
- Business owners who have poor personal credit
If you’re ready to get started, apply on OnDeck’s secure site:Learn More
OnDeck’s minimum qualifications
The company says it places more value on a business’s cash flow than on a solid credit score, a detailed business plan and assets — criteria typically necessary to qualify for a bank loan. Here’s what’s needed to qualify at OnDeck:
- You’ve been in business at least 12 months.
- At least one owner has a personal credit score of 500 or higher for term loans and a majority owner with a credit score of 600 or higher for lines of credit. This makes OnDeck an option for business owners with bad personal credit.
- You’ve had no personal bankruptcies in the preceding two years.
- Your business has a revenue of $100, 000 or more in the last year for term loans and $200, 000 or more for lines of credit.
- You’re able to provide a business tax ID, three months of credit card statements, one to three months of bank statements, a Social Security number and a driver’s license number.
- You’re not on the restricted industries list. The company does not lend to banks, collection agencies, real estate brokers or agencies, tax preparation services, pawn shops, auto sales, attorneys, personal trainers, travel agencies and funeral services, among others.
- You’re willing to sign a personal guarantee, a written agreement that pledges your personal assets to repay the loan if your business fails. OnDeck also takes a blanket lien on all business assets on its term loans, which gives the company the right to sell these assets to repay the loan if your business fails to.
Fast and easy
OnDeck loan applications can be completed online or over the phone in as little as 10 minutes. You only need basic information to apply, including a business tax ID, bank statements, credit card statements, your Social Security number and a driver’s license number.
You’ll be given a decision within minutes and, if approved, can receive funds in as little as 24 hours. This is attractive for a small-business owner who wants to move fast on a business opportunity or needs to meet an unexpected expense and can’t afford to wait months for a bank loan — for example, a retailer that needs $30, 000 to buy inventory for a holiday season rush or a restaurant that needs to buy a new oven to stay in operation.
Traditional bank loans typically require personal assets as collateral (such as your home or other personal property); OnDeck doesn’t. Banks typically want you to have been in business at least two years, whereas OnDeck requires only one year. And banks often look for a very strong personal credit score of 720 or higher; OnDeck’s minimum for term loans is a score of 500.
Loans get cheaper for loyal customers
OnDeck’s loans require a one-time origination fee of 2.5% of your total loan amount ($2, 500 for a $100, 000 loan). However, this figure drops to 1.25% on your second loan and 0% to 1.25% on your third and all future loans. Customers in good standing also typically get a reduced interest rate on their loans after several years with OnDeck, according to Breslow.
In addition, you might also qualify for lower rates (9% to 20% APR compared to normal rates of 14% to 36%) on an OnDeck line of credit if you use Intuit QuickBooks software; the two companies recently announced a partnership to create a loan fund targeting established small businesses with strong credit.
Loan repayments for OnDeck’s term loans are made either daily or weekly, and repayments for the line of credit are made weekly through ACH withdrawals (fixed, automatic debits from your bank account). Whether borrowers repay term loans daily or weekly depends on factors including time in business, industry, credit score and cash flow. Lower-risk businesses are more likely to receive a weekly option on term loans, the company says.
Since payments are automatic, you don’t have to worry about incurring a late fee, but you do need to ensure you have enough money in your account. If your business misses two straight payments, OnDeck will stop the ACH withdrawals and work with your company on a payment plan, which may include freezing payments for 30 days while you catch up, Breslow says.
OnDeck works with businesses that prefer daily or weekly repayments because of steadier cash flow, such as retailers, restaurants and doctors, and avoids lending to businesses where a monthly payment may be a better fit, such as a consulting firm that has just one invoice per month, Breslow says.
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