OnDeck Capital, a small business lender providing intermediate term loans and lines of credit, recently underwent a site rebrand. Although no specific changes were announced with the rebrand, the press release notes that this change is meant to reflect OnDeck’s focus on customer service.
“We wanted to show that it’s no longer just about getting financing quickly—it’s about getting the right financing for your business,” OnDeck’s Chief Marketing Officer Andrea Gellert told Bankless Times.
We took a detailed look at OnDeck back in April of this year, where we pointed out that OnDeck’s financing products feature a fast funding opportunity with an easy application process, a way for borrowers with less than perfect credit scores to access financing, as well as an opportunity for business owners to build their business credit (OnDeck reports payment activity to Experian, PayNet, and Equifax). Read more about OnDeck’s line of credit and term loans here.
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OnDeck offers small business term loans up to $500,000 and lines of credit up to $100,000. The overall cost of what they lend to consumers has continued to improve over the course of the last few years. Their most recent SEC filing reports that “as of June 30, 2016, the APRs [annual percentage rates] of our term loans outstanding ranged from 9.1% to 98.3% and the APRs of our lines of credit outstanding ranged from 11.0% to 39.9%.” The weighted average APR for term loans and lines of credit is 40.2% for Q2 2016, down from 46.5% in Q2 of 2015.
The reasons attributed to the lower APRs include longer average loan term lengths, more loans originating from lower cost partner channels, and the growth of their line of credit program. Their website notes that the average APR on a line of credit is 29.99%, which is competitive with other providers. The average rate on a loan is 29% excluding fees—still pricier than many other online term loan providers who offer loans between 6% and 35% (although in many cases other loan providers could require a more involved application process).
And there’s still a lack of consistency in how loan rates are portrayed to potential borrowers, as OnDeck’s loans are expressed in annual interest rates (AIR) or simple interest rate rather than annual percentage rate, which represents the total annual loan cost, including interest and fees.
OnDeck’s term loans are different from many term loan providers in that they feature a daily or weekly repayment schedule rather than more traditional monthly payments. Businesses that have inconsistent daily cash flow should keep this in mind as they consider loan options.