Kabbage vs. OnDeck: Which Lender Is Best for Your Business?

Kabbage works best for borrowers with fair credit who need fast cash, while OnDeck provides larger loans to expand.

Steve NicastroJul 15, 2021
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For businesses seeking a lender that offers speed, convenience and ease of qualifying, Kabbage and OnDeck are two good options.

Qualifying for a loan at a traditional bank takes time and requires you to have great credit and, often, collateral. These two online business lenders have an easy application process with minimal paperwork, higher approval rates and funding in 24 hours or less. In exchange, Kabbage and OnDeck have higher borrowing costs than banks.

Here’s a side-by-side comparison of Kabbage and OnDeck, and more details to help you find the best small-business loan.

Editor's note: Kabbage is currently not accepting new customers, but you can sign up for a waitlist on the lender’s website to be notified when that changes. Kabbage was acquired by American Express Co. last year. For similar financing, consider Kabbage competitors.

Kabbage is a good option if you:

  • Need fast cash for working capital.

  • Have average personal credit.

  • Prefer to make monthly payments.

Kabbage offers lines of credit, and each draw requires repayments over six, 12 or 18 months. Credit line amounts range from $1,000 to $150,000. (Read our Kabbage review.)

Minimum qualifications: Kabbage requires a minimum credit score of 640, at least one year in business and annual revenue of at least $50,000.

You also need to have a business checking account or online payment platform such as PayPal or QuickBooks.

Speed: The online application process can take less than 10 minutes. No documents are required, and you’ll get a loan decision on the spot.

You can get funds immediately or in just a few days, depending on how you receive the cash and how quickly Kabbage can verify your business data and bank account. You can get money more quickly through a direct transfer to your bank via your debit card or an instant transfer to your PayPal account rather than through an automatic deposit to your bank. You can also request a Visa credit card that is linked to your Kabbage line of credit.

Costs: Kabbage lines of credit have APRs between 9% and 36%.

Each month, you pay a percentage of the amount borrowed — the principal — plus a fee.

Monthly fees range from:

  • For six-month loans: 0.25%–3.50%.

  • For 12-month loans: 0.25%–2.75%.

  • For 18-month loans: 0.25%–2.50%.

Best uses: Kabbage is a good option for accessing working capital and covering day-to-day expenses, such as payroll and inventory.

OnDeck is a good option if you:

  • Need fast cash for a large expansion or working capital.

  • Need to borrow more than $150,000.

  • Are comfortable making weekly or daily payments.

OnDeck’s term loans range from $5,000 to $250,000 and provide a lump sum of cash at closing that you repay daily or weekly over up to 24 months.

Credit lines go up to $100,000 and are repaid weekly. (Read our OnDeck review.)

Minimum qualifications: To qualify for a term loan, you need to have been in business for at least one year, earn a minimum of $100,000 in annual revenue, have a personal credit score of 600 or better, and have had no personal bankruptcies within the past two years.

For the line of credit, you need to be a majority owner of the business with a minimum personal credit score of 600. The requirements for annual revenue and time in business are the same as for OnDeck’s term loans.

For both products, you’ll sign need to sign a personal guarantee. However, unlike OnDeck’s term loans, its lines of credit don’t require a lien on your business’s assets.

Speed: The application process is simple and takes about 10 minutes. You receive a loan decision within minutes and access to funds in as fast as the same day for loans and instantly for lines of credit withdrawals between $1,000 to $10,000. You can apply online or by phone. Find out more about the application process in our OnDeck step-by-step guide.

Costs: The APRs for OnDeck’s term loans range from 11% to 61.9%, which includes an origination fee of between 2.5% to 4% of the total loan amount. The fee drops to between 1.25% to 3% for your second loan and 0% to 3% for all loans thereafter.

There are no prepayment penalties, and OnDeck offers prepayment options that include potential interest rate reductions. Payments are deducted automatically from your business bank account.

OnDeck’s lines of credit have APRs between 11% to 61.9%. You repay each individual draw on the credit line weekly.

Best uses: OnDeck’s term loans generally are best suited for business owners who need a significant amount of money to buy equipment, open a new location, hire employees or make a large inventory purchase. Its lines of credit are a good option for businesses that need working capital or help to handle unexpected costs.

Evaluate small-business loans carefully

If neither Kabbage nor OnDeck is right for you, you have plenty of other financing choices depending on your financial situation and needs. When shopping for loans, compare APRs, the true cost of borrowing including all fees. NerdWallet’s small-business loans comparison tool can help: