OnDeck Small Business Loans: 2021 Review

Q: Does OnDeck conduct credit checks?

The website is a bit unclear, but basically, for small business loan or line of credit applications, OnDeck will perform a hard pull on the applicant’s credit history. A hard pull will be reported as a credit inquiry on your record. For applications in the US for a personal loan, though, OnDeck performs a soft pull on your personal credit score. This soft pull won’t be listed as a hard inquiry on credit reports. Soft pulls do not negatively affect your credit score. (Personal loan applicants with a locked credit file will be contacted by OnDeck to lift the lock and a hard pull is then conducted once the file has been unlocked.)

Q: What are the benefits of using OnDeck?

OnDeck is known for fast loan approvals and funding for both loans and lines of credit. As long as you qualify, you could have funds deposited into your business bank account as fast as the same day. It’s also possible for borrowers to build up their business credit scores, by maintaining a positive payment history with OnDeck. A business credit score is not the same as a personal credit score. OnDeck reports repayment history to credit bureaus, including Experian, Equifax, and Paynet. So, future lenders can view if payments were made on time or missed. (To apply for lending with OnDeck, the small business owner’s minimum personal FICO® Score floor is a 600.) Finally, as a borrower proves their reliability in making payments on time, they may be able to increase financing amounts and qualify for more competitive loan terms and rates.

Q: Does OnDeck offer peer-to-peer lending?

No, OnDeck does not offer peer-to-peer lending. Instead, businesses apply directly online and receive an approval decision within minutes.

Q: Does OnDeck report to the credit bureaus?

Yes, OnDeck reports to three credit bureaus: Experian, Equifax, and Paynet. Making timely payments and paying off the loan with OnDeck will be visible to future lenders. Consistently making payments on time can help build or improve a company’s business credit score. Of course, any late payments are reported and can damage a score. Making timely payments and paying off the loan will be visible to future lenders.

Q: Is OnDeck a legitimate lender?

Yes, OnDeck has an A+ rating from the Better Business Bureau. The company has been in business since 2006 and they claim they have helped small businesses borrow $13 billion since then.

Q: Can I settle with OnDeck?

Like other lenders, OnDeck may be open to settling on debt that a business owes but cannot repay in full. Consider seeking professional counsel to understand what settling a debt could mean for both your business and personal credit histories. It’s worth noting, again, that OnDeck secures its loans with business assets, which the lender has the right to seize if default occurs.

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Editor’s note: At Lantern, we strive to help you make financial decisions with confidence. To do this, we occasionally feature content that includes information about our partners and their products or services. We do not provide, endorse, or guarantee any third-party product, service, information or recommendations—and our opinions are our own.

Lauren Ward

Updated February 8, 2021

Overview of OnDeck

In business since 2006, online lender OnDeck offers established small businesses two forms of financing: 1) term loans and 2) lines of credit. Qualifying businesses can borrow up to $250,000 with a term loan or up to $100,000 with a line of credit.Both types of financing require you to be in business for at least one year, so OnDeck financing is not for just-launched companies or young startups. OnDeck reviews indicate an overall positive customer experience. In fact, as of this writing, the lender has earned 4.8/5 stars on Trustpilot.

Pros and cons

Pros

Fast application process
Same-day funding on finalized loans
Both term loans and lines of credit are available
Loan payments are reported to the credit bureaus, which could help build a borrower’s positive payment history

Cons

Must be in business for at least one year
Not available in Nevada, North Dakota, or South Dakota
Loans are secured by a general lien on existing business assets
No longer offers SBA Paycheck Protection Program (PPP) loans

OnDeck Small Business Loan Terms, Rates, and Fees

Loan amounts: $5,000 to $250,000; Lines of credit from $6,000 to $100,000APR range: Short-term loans range from 35% to 98.3% APR. Lines of credit run from 10.99% to 61.9% APR. The average line of credit rate is 48.06 APR. (Updated as of 4/9/2021.)Origination fee: 0% to 5%Minimum credit score: 600Time to funding: As soon as same dayCo-borrower needed: No

Other Lenders

OnDeck loan financing may not be the best fit for every small business. Whether you don’t meet the lender’s eligibility requirements or you simply want to compare financing options from multiple lenders, another small business loan may work for your business needs. Find out how OnDeck stacks up against Kabbage and other online business lenders.

What Type of Lending Does OnDeck Offer?

OnDeck offers term loans and lines of credit, which are well-suited for borrowers with a minimum FICO® Score of 600, who own established businesses with consistent incoming revenue. Term loan amounts go as high as $250,000, while a line of credit can go up to $100,000. OnDeck also rewards loyal borrowers—with eligible repeat borrowers able to earn access to higher credit limits and lower fees. The loan repayment period, typically, runs three to 36 months. So, it’s important to have a repayment strategy in place. OnDeck reports that its typical customer has been in business for around 3 years with more than $300,000 in annual earnings. OnDeck does not offer SBA loans, but did participate in the SBA Paycheck Protection Program (PPP) through August 8, 2020.

Important to Keep in Mind

Lenders like OnDeck can also charge origination fees on top of the interest. OnDeck’s origination fees range from 0% - 5% of the borrowed amount. So, it can be helpful to budget with these fees in—not just the interest. OnDeck business loans are secured by assets or collateral. While OnDeck won’t use personal assets to secure a loan (e.g., a business owner’s private property), OnDeck does place a general lien on business assets and collateral. If a borrower defaults on an OnDeck loan, they could lose the business assets that first secured the loan. For a line of credit, you’ll be charged a $20 monthly maintenance fee. The fee may be waived for six months if a borrower draws $5,000 or more during the first week of opening a line of credit account. Some customers also report having their lines of credit closed at the start of the novel Coronavirus pandemic. OnDeck has advertised greater lending restrictions to certain industries and states because of the current economic climate. There are also some restrictions on eligible businesses. OnDeck doesn’t lend within the following industries:

Adult entertainment
Firearms sales
Governmental and not-for-profit groups
Drug dispensaries
Horoscope and fortune telling services
Lotteries, gaming, or gambling
Money service businesses (MSB)
Boarding houses
Vehicle dealerships, used goods sellers, or auctions
Religious institutions or civic associations

Applying for an OnDeck Small Business Loan

OnDeck offers an online application process that they claim can be completed in 10 minutes. Alternatively, you can also call to apply. Interested applicants will need to gather essential details on the business and owner, including:

Business tax ID number
Social Security number of the business owner
Estimated annual gross revenue for the business
Average bank balances for the business

Applicants can also expect to share the last three months of bank statements.

OnDeck Eligibility Requirements

To apply for an OnDeck term loan or line of credit, there are some minimum eligibility requirements, including:

Businesses need to have been established for at least one year
Annual minimum business revenue of $100,000
Potential borrowers’ personal FICO® scores need to be at least 600
Businesses must possess their own bank account

As with many lenders, a strong revenue and repayment history may help qualify small business applicants for more competitive OnDeck interest rates.

OnDeck Loan Repayment

OnDeck’s term loans come with a relatively brief repayment period, generally spread across three to 36 months. Payments are automatically deducted from the borrower’s designated bank account either on a daily or weekly basis. Borrowers can apply for more funding when at least half of the loan balance has been paid off. For ongoing financing needs, OnDeck offers some loyalty perks. For instance, the remaining interest on a loan is waived when an eligible current borrower takes out a new business loan with OnDeck. Subsequent loans may also feature a lower origination fee or even a 0% fee. With a line of credit, borrowers have 12 months to repay the owed funds. This 12-month window resets every time a withdrawal gets made. However, there’s no prepayment penalty if a borrower pays off the balance in its entirety. Whenever there’s a remaining balance, OnDeck requires automatic weekly payments. Borrowers may be eligible for an increase to their credit lines if their business meets cash flow and other requirements.

The Bottom Line

Business owners looking for an easy online application and fast funding may consider applying for an OnDeck business loan or line of credit. You’ll need to meet revenue minimums as well as have at least a fair credit score to be considered—along with meeting OnDeck's other underwriting requirements. (Pre-qualifying for a loan in the US with OnDeck will not impact your credit score). Borrowers partnering with OnDeck can also expect automatic payments that get withdrawn from a bank account either daily or weekly. Some term loan applicants may qualify for OnDeck’s prepayment benefit, where they can pay back the loan early or in full. (Term loans with the prepayment benefit carry higher interest rates). There is no prepayment penalty for lines of credit with OnDeck. Looking for more small business loan options? With Lantern's help, you can spend less time searching for financing and more time growing your business.

Frequently Asked Questions

Does OnDeck conduct credit checks?

What are the benefits of using OnDeck?

Does OnDeck offer peer-to-peer lending?

Does OnDeck report to the credit bureaus?

Is OnDeck a legitimate lender?

Can I settle with OnDeck?

About the Author

Lauren Ward

Lauren Ward is a personal finance expert with nearly a decade of experience writing online content. Her work has appeared on websites such as MSN, Time, and Bankrate. Lauren writes on a variety of personal finance topics for SoFi, including credit and banking.

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