Top perks
Choose between a line of credit or a term loan: OnDeck offers two different types of loans depending on your needs:
- Business line of credit: This is a revolving credit line that you can use again and again. You can draw funds as needed, then repay them to open up funds for a future draw.
- Term loan: This is a one-time loan; once you repay the loan, your relationship with OnDeck is finished, unless you apply for another loan or a credit line.
Get accepted even with average credit: The feature that sets OnDeck apart from other business lenders is its lower personal credit score requirement. As the business owner, you only need a minimum FICO® Score of 625, which is solidly in the "fair" or "average" range. Other lenders require business owners to have good or even excellent personal credit to qualify.
Pay your loan off early with no prepayment fee: When APRs are this high, the best thing you can do is pay your loan off early. This can cut down how much interest you pay over the life of the loan and help you save money. Thankfully, OnDeck doesn't charge you any prepayment fees to do so. Some other lenders may actually charge you a fee to pay off your loan early, which can somewhat defeat the purpose.
What could be improved
Sky-high APRs make these loans expensive: The most important downside of OnDeck loans is that they are expensive. Not in origination fees -- those seem fairly standard -- but in interest fees. According to OnDeck, the average APR for a line of credit is 55.9% and the average APR for a term loan is 56.1%. This is very high. For reference, a typical small business credit card will have an APR in the 18% to 29% range. If you can qualify for a less expensive loan, definitely look elsewhere.
Business must have annual revenue of at least $100K: OnDeck has some very relaxed credit score requirements, but the other side of that coin is you need to show that you're good for the money some other way. In this case, it's by meeting the high revenue requirement. Specifically, businesses need to show at least $100,000 in annual revenue to be eligible for an OnDeck loan. This may cause newer businesses to look elsewhere for a startup loan.
You must make a personal guarantee for the funds: Some business lenders may lend money to your business itself, without needing to know anything about the owner's personal credit. OnDeck is not one of those lenders. Not only will the owner's personal credit be important to approval, but you'll also need to personally guarantee the loan. This means that you'll be responsible for paying back the money even if your business fails or goes out of business.
