OnDeck Review: What You Need To Know Before Investing

On Deck Business Review

Since 2006, OnDeck has assisted small businesses in obtaining funding through its online lending platform. It provides two loan options that may be suitable for companies requiring quick cash access. 

Business owners who cannot get business loans because of poor credit or other concerns may want to examine OnDeck business funding options.

However, interest rates for OnDeck’s term loans and credit lines can be exorbitant compared to traditional business lenders.

Some small businesses may find managing the expedited payback schedule associated with OnDeck’s loan offerings challenging.

This article provides an overview of the OnDeck lending process and a breakdown of its different mechanics. The card list is also included, so you can better understand what’s available to you.

What is OnDeck Business?

OnDeck is a well-known online lending platform for small businesses. Short-term loans and revolving lines of credit are the two types of company loans that OnDeck currently offers.

OnDeck’s loans are quick and convenient for various business financing needs for those who qualify.

On the other hand, OnDeck’s loans might be pretty costly. OnDeck’s short-term loans have APRs as high as 98 percent, with an average APR of around 50%. 

Naturally, the rate supplied to you will be determined by the strength of your company.

Because OnDeck’s loans might be costly, do some comparison shopping before deciding on a lender. OnDeck is challenging to beat if you need a loan quickly or don’t qualify elsewhere. 

Despite the potential drawbacks, OnDeck is transparent, customer service is easy to get in touch with, and most customers report positive experiences.

What are the Services offered by OnDeck?

OnDeck offers up to $250,000 in term loans and $100,000 in credit lines.

So, how does OnDeck work? 

After completing a brief online application, you’ll be asked to provide some paperwork before accepting a loan offer and collecting your funds. You make your payments by ACH (Automated Clearing House).

OnDeck’s term loans are quick and straightforward to apply for, and you might have your money the same day your loan is accepted. 

OnDeck rewards recurring clients with cheaper borrowing rates and other perks, such as eliminated fees.

OnDeck also offers revolving lines of credit, which are just as quick and easy to get approved for–fill out the application.

You can withdraw funds once approved, and there are no draw fees or penalties for repaying early.

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What are the Borrower Requirements for OnDeck?

The following are the minimal requirements to be qualified for an OnDeck short-term loan or line of credit:

Time In Business: 1 year

Credit Score: 600

Business Revenue: $100,000 per year

You must also make at least five bank transactions to a business account each month, and your company cannot be in one of OnDeck’s banned industries. This includes:

  • Amusement for adults
  • Dispensary pharmacies
  • Vendors of weapons
  • Government, non-profit, public administration, or civic organizations are examples of government.
  • Horoscopes/Fortune-telling
  • Services for gambling money
  • Boarding and lodging
  • Nevada, North Dakota, and South Dakota are the only states where OnDeck does not currently lend.

What are OnDeck Interest Rates & Fees?

The APR on OnDeck’s term loans starts at 35%, but the average borrower will get closer to 54.96%. Payments are made every day or every week. 

Rather than allowing or prohibiting prepayment on all loans, OnDeck allows it. The interest rate on loans with a prepayment option is usually higher. 

You’ll still owe 75% of the remaining interest indicated in your loan agreement if you prepay without a prepayment benefit.

OnDeck only charges an origination fee besides interest. Before you get the loan, this is deducted from the principal. 

OnDeck will take $250 and give you $9,750 if you have a $10,000 loan with a 2.5 percent origination charge.

Additionally, OnDeck offers loyalty perks to returning clients who renew with the company, such as waiving all remaining costs on your existing loan if you apply for a new loan. 

OnDeck may provide a lower or zero percent origination charge for returning customers.

What is OnDeck Business Line of Credit?

OnDeck charges a $20 monthly maintenance fee besides interest, but there are no origination or draw costs. 

In addition, if you make a $5,000 withdrawal within the first five days of creating an account, the company will waive your monthly maintenance cost for the first six months.

The APR on OnDeck’s term loans starts at 35%, but the average borrower will get closer to 54.96%. Payments are made every day or every week. 

Rather than allowing or prohibiting prepayment on all loans, OnDeck allows it. The interest rate on loans with a prepayment option is usually higher. 

You’ll still owe 75% of the remaining interest indicated in your loan agreement if you prepay without a prepayment benefit.

OnDeck charges a $20 monthly maintenance fee besides interest, but there are no origination or draw costs. 

In addition, if you make a $5,000 withdrawal within the first five days of creating an account, the company will waive your monthly maintenance cost for the first six months.

For transactions between $1K and $10K, OnDeck’s lines of credit offer Instant Funding. This enables qualified firms to withdraw funds from their LOC without additional fees.

You may need to read this: Horizon Business Funding Review | 2023

What are the Eligibilities for OnDeck?

OnDeck’s financing alternatives may be ideal for companies that require the following:

1. Quick funding is available. 

Borrowers who meet the criteria can access their loan proceeds or credit lines when they apply for funding. You may submit an OnDeck funding application online in minutes because the paperwork requirements are less demanding than other lenders.

2. Credit score standards are less stringent.

To qualify for an OnDeck business term loan or line of credit, you need a personal FICO score of at least 600. Other lenders may require a minimum score of 670 to be considered for business finance. Your organization may need to establish business credit to qualify for business loans.

3. Money is set aside for unexpected expenses. 

OnDeck’s business finance offering isn’t the cheapest on the market. However, suppose your company needs emergency finances quickly and doesn’t have the time to wait through a typical business loan application and funding process.

In that case, the online lending platform’s fast funding capabilities and simple application process may be a good option.

4. They have the option of paying their loan off early.

If you pay off your line of credit or term loan early, OnDeck will not charge you a penalty. Some applicants may be eligible for OnDeck’s Prepayment Benefit, which waives any remaining interest on your loan.

If you don’t qualify for the Prepayment Benefit but still wish to pay off your debt before the deadline.

What OnDeck Offers

OnDeck offers small businesses the opportunity to get financing in two different ways:

1. Term loan for a business. 

This installment loan allows business owners to borrow a large amount of money. According to the loan agreement’s agreed-upon repayment schedule, borrowers must repay the loan proceeds plus interest and fees.

On Deck provides short-term business financing with terms ranging from 18 to 24 months.

2. Line of credit for a business. 

This is a revolving account that, in some ways, resembles a business credit card. If your firm qualifies for this financing, you’ll be given a credit limit and the ability to borrow up to that amount.

You can re-use your credit limit as you pay off your amount during the draw period. You’ll only have to pay interest in the amount you borrow, not the total amount you owe.

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What are the Pros and Cons of OnDeck Business Loan?

Pros

  • Borrower criteria are less stringent than they are with banks.
  • A variety of financing options are available.
  • Reduced charges for returning customers
  • The application procedure is simple and quick.
  • Quick disbursement of funds
  • Improves your company’s credit score

Cons

  • In some states, financing is not accessible.
  • Some industries do not have access to it.
  • Rates might be quite high.

What is OnDeck Application Process Like?

One of the major benefits of using OnDeck for company funding is the ease with which you may apply. Many candidates will give minimal to no evidence, but each scenario is unique. 

In either case, you should be prepared to provide OnDeck with the following information when applying for a business loan or line of credit.

  • Employer Identification Number (EIN) (EIN)
  • Number assigned by the Social Security Administration (SSN)
  • Estimated annual gross revenue
  • The average balance in a business bank account

OnDeck may also ask for copies of your business bank statements for the three months preceding your application.

Positive OnDeck Business Review

OnDeck’s website features several video testimonials and many positive reviews on its Facebook, Trustpilot, and Google pages. 

OnDeck has a Trustpilot rating of 4.7/5 stars, with overwhelmingly positive feedback. While there are some issues with OnDeck loans, many businesses are delighted with the service. Here’s what they thought:

  • The quick and simple application procedure
  • Quick turnaround time for funding
  • The kind and knowledgeable customer service

OnDeck submits information to commercial credit bureaus (which helps you build business credit)

Negative OnDeck Business Review

The Better Business Bureau has given OnDeck an A+ rating. It has received 34 complaints and 1378 customer reviews in the last three years, with an average rating of 3.75/5 stars. Given the company’s size, this number of complaints is not high.

Looking more closely at OnDeck Capital’s concerns, some common accusations levied against OnDeck in unfavorable reviews include:

  • Exorbitant borrowing costs.
  • A lack of transparency about loan conditions.
  • Daily repayments.
  • Application delays.
  • Insufficient COVID assistance.

1. High Borrowing Costs: 

With effective APRs reaching 98.3 percent, this lender’s loans are not inexpensive. For instance, lenders that offer more traditional term loans typically have 40 percent or fewer APRs. While paying more for working capital isn’t the end of the world, I suggest you do some comparison shopping before accepting a loan if you have the time.

2. Transparency in advertising: 

Some customers have expressed concern that they did not completely comprehend the exact cost of the loan before accepting the offer.

3. Application Delays: 

While OnDeck can make a lending decision for most applicants in seconds, some must submit more information. However, these delays are typical in the lending sector and, in most situations, will not add considerable time to the application.

Read: Twitter for Business Review | 2023

Conclusion

OnDeck may not specialize in any area, but it mixes accessibility and flexibility, allowing firms to apply for short- and medium-term finance choices.

If you own a well-established firm that has been hampered by less-than-perfect credit, OnDeck may be the answer. While some business owners may find cheaper rates elsewhere, OnDeck cares about educating merchants and providing a positive customer experience.

FAQs

What are the benefits of using OnDeck?

OnDeck provides funding as fast as the same business day after approval, carries looser qualifications than traditional banks, and it may reduce its origination fee for repeat customers.

Does OnDeck Work with a Specific Industry?

OnDeck serves over 700 industries, so we’re likely able to work with you. Just in case, here is a list of the few industries we can’t serve.

What is OnDeck Interest Rate?

OnDeck’s term loans carry APRs ranging from 9% to 99%, while rates for its lines of credit range from 11% to 61.9%, according to OnDeck regulatory filings. Rates change slightly each quarter. This APRs include origination fees on its term loans and a $20 monthly maintenance fee for the lines of credit.

FAQs of OnDeck Business Review

What are the benefits of using OnDeck?

OnDeck provides funding as fast as the same business day after approval, carries looser qualifications than traditional banks, and it may reduce its origination fee for repeat customers.

Does OnDeck work with a specific industry?

OnDeck serves over 700 industries, so we’re likely able to work with you. Just in case, here is a list of the few industries we can’t serve.

What is OnDeck interest rate?

OnDeck’s term loans carry APRs ranging from 9% to 99%, while rates for its lines of credit range from 11% to 61.9%, according to OnDeck regulatory filings. Rates change slightly each quarter. This APRs include origination fees on its term loans and a $20 monthly maintenance fee for the lines of credit.

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