Following last week’s LendingClub IPO, OnDeck Capital went IPO at $20 per share this morning and closed at $27.98, a 39.9% gain. Unlike LendingClub’s focus on consumer term loans, OnDeck focuses on short term business loans. At Nav, we haven’t really recommended OnDeck’s loan products because they are not cheap as mentioned in the decoding post and the renewal trap post. But we also believe the cost will for sure go down for OnDeck’s loan products as the competition is heating up.
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Here are some interesting facts about OnDeck’s Loans as shown in the S1 filing:
- APR: 19.9% – 99% for term loans, averaged APR 54%; 30-36% for Line of Credit.
- OnDeck focuses on access and efficiency. Not Cost.
- Median years in busines: 7.5. 90% of the loans are for businesses are 2+ years in business while 28.3% of the loans are for businesses less than 5 years in business.
- Initial loan size: $30,818; repeat loan size: $45,390
- 49.2% of the loans are from repeat customers. This is an issue actually because the renewals are typically bad deals for customers.
- Percentage of loans through brokers decreased from 68.6% in 2012 to 32.3% in 2014. This is a good thing as the loan brokers can charge outrageous broker fees.
- Net charge off is 6.9% of 2012 cohort. (99.8% matured)
- $458M loans originated in 2013; $788.3M in 9 months ended 2014. They are set to originate more than $1B of loans this year.
- Net margin is -13.4% in 2014 vs. -44.6% a year earlier.
Overall, OnDeck is a formidable establishment for small business financing. Congratulations to their IPO and hopefully they can stay efficient and bring more affordable financing products for business owners in coming years.
- OnDeck Capital’s profile
- Decoding a Loan Offer from OnDeck Capital
- The Hidden Cost of Refinancing Merchant Cash Advances
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