Last reviewed by:
Lindsay VanSomeren
July 12, 2022
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OnDeck is an alternative small business lender that offers small business loans and lines of credit to businesses that otherwise might not qualify for traditional bank loans. OnDeck is based in New York and has been around since 2006. There isn’t much that distinguishes it from other alternative small business lenders, but if you’re in the market for funding, it could be worth contacting the company to see what rates it can offer you while you’re shopping around.
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OnDeck offers two main products: short-term business loans, and business lines of credit.
| OnDeck financing at a glance | |||||
| Amount | Terms | Starting rate | Fees | Min. credit score | |
| Short-term loan | $5,000–$250,000 | 3–24 months | 29.90% APR | 0.00%–4.00% origination fee | 600 |
| Business line of credit | $6,000–$100,000 | 12 months | 29.90% APR | $20 monthly fee | 600 |
If you need funding and you don’t want to be in debt for a while, consider OnDeck’s short-term loans. Loan amounts range from $5,000 to $250,000, with term lengths from 3 to 24 months. Interest rates on these loans start from 29.90% APR, although you’ll need excellent credit, strong business income, and even prior borrowing experience with OnDeck in order to be eligible for rates that low. Generally, businesses end up paying an average APR of 62.1%*, according to the company.
If you are approved for a loan, you could receive funding as soon as the same day. However, this benefit is limited to businesses in certain states, and for loans under $100,000. After OnDeck disburses the funds, the lender will sign you up for automatic payments on a daily or weekly basis.
OnDeck’s short-term loans can come with prepayment penalties. If you pay off your loan early, OnDeck may waive 25% to 100% of the remaining interest on your loan, leaving you responsible for up to 75% of the remaining interest. All short-term loans come with a 25% waiver, but eligibility for more than 25% would depend on your creditworthiness and term length.
If you qualify for the full 100% waiver when you first take out your loan, which OnDeck calls a “Prepayment Benefit,” you’ll be charged a higher rate in return. OnDeck waives all remaining interest if you apply for a new loan when your current one is at least 50% paid off, although renewing a business loan would keep you in debt for longer.
If you’re not sure when exactly you’ll need the money and you’d like the option to borrow when you need it, OnDeck offers a business line of credit for a $20 monthly fee. This fee is waived for the first six months if you withdraw at least $5,000 from your credit line within the first week of opening the account. Depending on your creditworthiness, you may be eligible for a line of credit between $6,000 and $100,000.
When you need to borrow money, you can simply log into OnDeck’s website and request it. It’ll generally be in your bank account within 30 minutes. Each time you make a withdrawal against your line of credit, you’ll reset your payment, with payments calculated to pay off your outstanding balance over the course of 12 months. Rates start from 29.90% APR. But, as with the short-term loan, only well-qualified businesses that have worked with OnDeck before would be eligible for that rate. According to the average APR for lines of credit is 48.9%*, according to the company.
One difference between an OnDeck line of credit and an OnDeck loan is that the line of credit doesn’t come with a prepayment penalty. You can pay off your balance at any time and increase your credit limit just like with your personal credit card. Otherwise, you’ll make payments weekly until the loan is paid off in 12 months’ time (assuming you don’t make any other draws and reset the clock).
*Based on loans originated in the half-year ending March 31, 2022.
OnDeck lends to businesses in all states except for Nevada, North Dakota and South Dakota. You’ll also need to meet the following OnDeck loan requirements in order to get a loan:
OnDeck also doesn’t lend to businesses in certain industries, including:
Applying for a loan or line of credit with OnDeck requires basic details about your business, along with certain documents:
OnDeck may be a good choice if you think you’ll need cash quickly, such as within the same day. However, you could pay a price for that convenience in the form of high rates and fees. Keep in mind you could face a penalty for paying off your loan early as well.
Furthermore, while OnDeck does allow for large loans (up to a quarter of a million in the case of term loans), the repayment periods of up to 24 months, generally the standard length of time for the alternative lending industry, may seem quite short compared to traditional bank loans. That means you could be stuck with large payments in the meantime, which can hold your business back.
It may be worth trying OnDeck to see what it can offer you. However, if you’re after more favorable rates and terms, consider shopping around for the best rates.
Here is how some other small business lenders stack up to OnDeck:
Credibly offers higher loan amounts of $400,000 (versus OnDeck’s $250,000 cap). It doesn’t offer any lines of credit, but it does offer merchant cash advances which may work well for businesses like retail stores or restaurants. Notably, if you don’t qualify for OnDeck financing based on your credit, it may be possible with Credibly: You’ll only need a 500 credit score to be approved for working capital loans or merchant cash advances.
Like Credibly, Fora Financial also offers larger loans up to $750,000 compared to OnDeck. It also offers a merchant cash advance in place of a line of credit, which may be better or worse for you depending on your business type. In lieu of charging interest rates, however, Fora Financial charges factor rates on its loans and advances, which can make it hard to compare the cost of the loan with other lenders.
BlueVine lends to similarly sized businesses ($120,000 per year in revenue minimum), but it may be cheaper to borrow here. Simple interest rates for BlueVine lines of credit start as low as 4.80% for a 26-week term. Of course, only well-qualified applicants will get that rate. BlueVine also offers term loans and invoice factoring.