Editorial Review

OnDeck Small-Business Loans: 2020 Review

OnDeck loans are easy to obtain and available for small-business owners with fair to good personal credit.

Steve NicastroApril 30, 2020

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Our Take

OnDeck - Online term loan
Apply Now

on OnDeck's website

Est. APR

9.00 - 99.00%

Min. Credit Score

600

Pros & Cons

Pros

  • Cash can be available within the same business day.

  • Requires low minimum credit score.

  • Less paperwork than most lenders.

Cons

  • Fixed-fee structure means early repayment will not save interest.

  • Requires frequent (daily or weekly) repayments.

  • Requires business lien and personal guarantee.

Compare to Other Lenders

OnDeck - Online term loan
Kabbage - Line of credit
QuarterSpot - Online term loan
Apply NowApply NowApply Now
Est. APR

9.00 - 99.00%

Est. APR

24.00 - 99.00%

Est. APR

30.00 - 70.00%

Min. Credit Score

600

Min. Credit Score

560

Min. Credit Score

550

Full Review

LOOKING FOR CORONAVIRUS BENEFITS INFORMATION?

OnDeck Capital provides speed, convenience and looser qualifications than most banks, but the online business lender might also charge a higher annual percentage rate.

OnDeck may be a good fit for your business if you:

Need cash fast: You can apply online or via phone in as little as 10 minutes and, if approved, get funded in as little as 24 hours for a term loan and instantly for a line of credit for withdrawals between $1,000 to $10,000.

Have a less-than-stellar personal credit score: The minimum personal credit score is 600; typical OnDeck borrowers have credit scores between 680 to 720.

Have big, unexpected expenses: The quick turnaround on financing means you can get cash in a pinch.

Have uneven cash flow: OnDeck’s line of credit may help tide you over during periods of low cash flow.

OnDeck term loan

Loan amount: $5,000 to $500,000.

APR: 9% to 99%.

Loan term: Repaid daily or weekly for 3 to 36 months.

How to qualify: 

  • 600+ minimum credit score.

  • 3+ years in business.

  • $250,000+ in annual revenue.

  • No bankruptcy in past 2 years.

  • Personal guarantee required.

OnDeck line of credit

Loan amount: Up to $100,000.

APR: 13.99% to 63%.

Loan term: Repaid weekly.

How to qualify:

  • 600+ minimum credit score.

  • 3+ years in business..

  • $250,000+ in annual revenue.

  • No bankruptcy in past 2 years.

  • Personal guarantee required.

Reasons to use OnDeck

Fast and easy

OnDeck loan applications can be completed online or over the phone in as little as 10 minutes. You need basic information to apply, including your business tax ID, three months of bank statements, Social Security number and driver’s license number.

If you’re approved, an OnDeck loan advisor reaches out within one business day of completing the application, to review your offer and complete the online checkout.

You can receive funds as fast as the same business day after approval, according to OnDeck.

Looser qualifications than banks

Traditional bank loans typically require collateral, such as your home or other personal asset, to secure a loan. OnDeck doesn’t. Banks often want borrowers to have a personal credit score of 720 or higher; OnDeck’s minimum is 600.

A typical OnDeck borrower has the following:

  • Personal credit scores of 680 to 720.

  • Annual revenue exceeding $500,000.

  • Time in business of between four to six years.

Cheaper loans for repeat customers

OnDeck’s term loans have a one-time origination fee between 2.5% to 4% of the total loan amount on your first loan. This fee drops to 1.25% to 3% on your second loan and to 0% to 3% on your third and future loans.

Build business credit

OnDeck reports your payment activity to the business credit bureaus Equifax, Experian and PayNet. Making timely payments should build your business credit, which could help you get larger and less expensive small-business loans in the future.

Where OnDeck falls short

Loans can be expensive

OnDeck’s term loans carry APRs ranging from 9% to 99%, while rates for its lines of credit range from 13.99% to 63%. Rates change slightly each quarter.

These APRs include origination fees on its term loans and a $20 monthly maintenance fee for the lines of credit. The maintenance fee is waived for the first six months if you draw $5,000 or more within the first five days of opening the credit line. There are no fees to draw money.

Lien required in addition to personal guarantee

Although OnDeck’s term loans aren’t backed by specific collateral, the company takes a blanket lien on all of a business’s assets. Like most lenders, OnDeck also requires borrowers to sign a personal guarantee, a written statement that says the lender can go after a borrower’s personal assets in the event of nonpayment of the loan. Failure to repay could damage your personal credit score.

Frequent repayments

OnDeck deducts a fixed daily or weekly payment from your business bank account. Term loans are repaid daily or weekly, while lines of credit are repaid weekly. Businesses with uneven cash flow should be aware of the frequent repayments.

No benefit to early repayments

OnDeck doesn’t assess prepayment penalties, but repaying its term loans early won’t save you money because the lender requires customers pay a fixed amount of fees. This differs from small-business loans that require monthly payments of principal and interest based on an amortization schedule. Borrowers who repay amortizing loans early save on interest.

Not suitable for every business

OnDeck works with most types of small businesses — such as doctors, dentists, restaurants, auto body shops and beauty salons — that have annual revenues from $100,000 to $5 million. Here’s a list of businesses it won’t lend to, including drug dispensaries and car dealers.

Compare business loans

If you’d like to compare loan options, NerdWallet has a list of small-business loans that are best for business owners. All of our recommendations are based on the lender’s market scope and track record and on the needs of business owners, as well as rates and other factors, so you can make the right financing decision.

Frequently asked questions

OnDeck reports payment activity to each of the three business credit bureaus: Equifax, Experian and PayNet. Making timely payments on your loan can build your business credit, which may help you qualify for cheaper financing and larger loans.

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.

OnDeck is a direct provider of business loans and does not offer peer-to-peer lending, which allows you to borrow directly from an individual or a group of investors instead of a lender.